MIDF Research opined that the ringgit will reach RM4.00 against the US dollar by end 2023, and average RM4.20 against the dollar.

“Fundamentally, the ringgit is in a good position as the domestic economy stays on an upbeat momentum and as a net exporter of crude petroleum, liquefied natural gas (LNG) and palm oil,” it said in a research note yesterday.

It added that Malaysia stands to benefit from the elevated global commodity prices.

Despite the negative knee-jerk reaction of world equity markets to the banking crisis in the US, MIDF has maintained its gross domestic product (GDP) growth target for Malaysia at 4.2%.

“At (the) corporate earnings level, the consensus is still expecting FBM KLCI earnings for this year to register double-digit percentage growth,” it said.

In line with Rakuten Trade Sdn Bhd’s forecast, MIDF expects the FBM KLCI’s valuation to increase in due course.

MIDF attributes this to expected earnings growth, the end of the interest rate tightening cycle, and no systemic distress in the banking sector.

Foreign fund inflows

On the other hand, Rakuten had emphasised that a turnaround was on the cards and Malaysia would see foreign fund inflows.

It expects the ringgit to recoup its recent losses and close 2023 on a stronger note with the return of foreign funds to Malaysia, amid the banking crisis fear in the US and Europe.

“Following the banking sector debacle in the US, we are now even more confident that foreign investors will certainly look to diversify their financial portfolio with Asian banks as the prime targets,” Rakuten head of research Kenny Yee said recently.

He said there will be improving demand for the local currency once the foreign funds start to spill over back into Asia. “When the foreign funds decide to come over, the demand will drive up the value of the ringgit,” he added.

Rakuten is projecting the local currency to strengthen to RM4.10 to RM4.20 versus the US dollar by end-2023.