The ringgit is on a weakening path in 2022, according to Fitch Solutions Country Risk & Industry Research.
In a note on Tuesday, Fitch Solutions retained its 2021 average exchange rate forecast at RM4.15 to the US dollar (USD), but revised its 2022 average forecast to RM4.20/USD from RM4.10/USD previously.
It said the short-term outlook for the ringgit remains weak due to the still-serious third wave of Covid-19 infections and the fiscal loosening that has and will continue to be undertaken to support the economy in light of the outbreak.
“Meanwhile, the long-term outlook for the ringgit has worsened with hawkish tilts in major central banks around the world, although any downside will be contained by undervaluation of real effective exchange rate (REER) terms and stronger economic activity amid shorter periods of containment measures being in place in 2022 versus 2021,” it said.
Short-term outlook (three to six months)
Fitch Solutions said since the last update in June 2021, the ringgit had weakened further, slipping by 0.3% against the US dollar to trade at RM4.18/USD as of Sept 24, from RM4.16/USD on June 23, bringing the year-to-date (YTD) average to RM4.13/USD.
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