KUALA LUMPUR, Feb. 22 (Xinhua) — MIDF Research foresees the Malaysian ringgit is in a good position to strengthen in 2024 as Malaysia’s domestic economy stays on upbeat momentum, supportive global commodity prices, sustained trade surplus and possible central bank rate cuts in 2024.

The research house said in a note on Thursday that as it expects ringgit to appreciate benefiting from more inflows coming back to the emerging markets, it projects ringgit to strengthen against U.S. dollar to 4.38 in 2024, compared to the 2023 average of 4.56, and to reach 4.20 by the end of the year, compared to 4.59 at the end of last year.

According to MIDF, the strong U.S. dollar has been the main factor for the depreciation of most currencies since early 2022 due to the aggressive interest rate hikes by the U.S. Federal Reserve (Fed).

“Similarly, ringgit has also weakened and remained on the depreciation path as the Fed kept on delaying its interest rate pause. In addition, contractionary external trade performances also dragged the recovery for ringgit in 2023,” it said.

According to the Malaysian central bank, the Malaysian ringgit has fallen 4.41 percent to 4.7925 against U.S. dollar as at 12:00 p.m. of Thursday local time from 4.59 at the end of 2023.

The bank said that the current level of ringgit does not reflect the positive prospects of the Malaysian economy going forward.