KUALA LUMPUR: The ringgit is expected to remain stable and trade in a range of between 3.97 and 4.30 against US dollar in 2020 despite headwinds and unpredictable exogenous variables in the global financial markets, IQI Global chief economist Shan Saeed said on Dec 4.
He based the forecast on several premises including that the ringgit will follow the trend of the Chinese yuan and crude oil price movement.
“The ringgit is going to monitor endogenous and exogenous variables for its movement in 2020.
“I have been observing the ringgit movement in the last seven years very closely and it has maintained structural stability in wake of the currency war which was commenced by the US Federal Reserve in December 2008,” he said.
Shan felt that many global central banks would be heading to a lower interest rates regime in 2020 to ward off recession concerns.
He said Bank Negara Malaysia (BNM) is also expected to adjust policy levers as per the market forces with the discount rate to meander at around 2.5% to 3.0% next year.
“BNM still has a lot of options to manoeuvre through monetary levers to spur growth and can deliver economic outcomes successfully.
“There are plenty of policy levers ammunition at hand to fire up the economy. It is always the monetary policy that drives the economy not fiscal policy which has limited economic outcomes and impact on the gross domestic product (GDP) outlook,” he said, adding that the markets have confidence in BNM to stimulate growth through prudent and effective use of the monetary policy.
Shan however cautioned on the external outlook, saying: “Advanced economies’ central banks have been ineffective in making a significant contribution to GDP growth outlook.
“They have been following quantitative easing and negative interest rates, which means borrowing future growth rates in a few economies but with zero impact.
“Quantitative easing had inflated asset prices in the global financial markets and created distortion.” – Bernama
