The ringgit is expected to hover around the 3.18 level against the greenback by year-end, says HSBC managing director and head of Asia currency research Paul Mackel.
However, the local unit is expected to fall to the 3.30 level against the US dollar next year as the greenback strengthens, supported by the economic recovery as well as the stimulus tapering process in the United States, he told a press conference in Kuala Lumpur today.
"It's going to be a bumpy ride for the ringgit next year.
"This is not a dollar/ringgit story per se. This is more on how the market responds to the changing dynamics and how they are thinking about not only the US growth but also the Federal Reserve monetary policy," said Mackel.
Among Asian currencies, he said, the ringgit will not be an outperformer, partly because some of the structural flow does not support the market.
Mackel said the external environment, especially the US, rather than the domestic part, will be the driver of currency movements.
"As for other Asian currencies, they will also remain very volatile.
"Some are more obviously volatile than others, and the two currencies that stand out are the Indian rupee and Indonesian rupiah due to their relatively weaker balance of payment positions compared to other countries in Asia," he added.
Mackel said the Chinese renminbi, Taiwan dollar and Korean won are not very volatile because their balance of payment positions are much stronger than regional peers.
"This is not an Asian currency specific story. This is the view that slowly the US dollar is moving on to solid growth and it's going to be higher against a lot of other currencies.
"There are going to be risks around especially with regards to the exchange rate going to be more volatile than what it was, and it will be the biggest challenge for investors," he added.-- Bernama
