In a note today, RHB Investment analyst Sailesh Jha said the central bank’s forex intervention is unlikely to have a sustained durable impact on the US dollar-ringgit pair.

He added that BNM’s recent announcement implied that it concurred with the consensus view of a challenging global environment in the second half of 2023.

RHB Investment holds the view that the world and US economy are likely to recover by this year’s summer.

On June 27, BNM announced that it may ‘intervene’ in the forex market to stem any excessive currency movements.

The international reserves amounted to US$113 billion as at June 15, 2023.

On the overnight policy rate (OPR), Jha said BNM is expected to keep it unchanged at 3% during the upcoming monetary policy committee meeting this Thursday.

“The Bloomberg consensus estimate is for the BNM to be on hold on July 6. We maintain our peak OPR forecast of 3.25% in 2023,” he said.

Previously, RHB Investment had forecast that a further 25 basis-point hike will take place on July 6.

Jha said the longer BNM delays raising the OPR, negative carry against the US dollar is likely to continue rising as the US Federal Reserve’s lending rate accelerates to a peak of 5.5%-5.75%.

“With the balance of risk titled towards a print of 5.75-6%, significant fiscal reforms are unlikely to materialise for the rest of the year,” Jha said.