The ringgit will likely strengthen to around RM4.25 against the US dollar next year on the back of improving commodity prices, says Maybank Investment Bank (Maybank IB) in a report.<\/p>\n
The Malaysian currency has been considered to be extremely volatile over the past year and fundamentally undervalued.<\/p>\n
But Maybank IB believes the weakness of the ringgit is temporary and will strengthen once oil prices stabilise, domestic demand continues to remain resilient and commodity prices see a turnaround.<\/p>\n
The ringgit is about 20% undervalued to its fair value point estimate of RM3.65. The research house expects the ringgit to trade at the 4.2500 levels in the last quarter of the year.<\/p>\n
The ringgit opened at 4.4295 yesterday and was traded at 4.4230 at 5pm from Wednesday\u2019s close of 4.4323.<\/p>\n
The stronger performance was led by earlier expectations that the European Central Bank would extend its asset purchase programme at its meeting yesterday.<\/p>\n
In the case of the US Federal Reserve (Fed), which will hold its policy meeting next week, market expectations are for a hike in the interest rate.<\/p>\n