KUALA LUMPUR – The ringgit is expected to remain volatile in the near term on the vulnerability in the large foreign holdings of fixed income instruments in the country and the challenging global economic environment.
In a note yesterday, RHB Research said the other factors included the possibility of a rate increase by the US Federal Reserve and a further Chinese yuan devaluation.
“The local unit is expected to trade at the RM3.90-RM4.20 range against the US dollar before settling at RM4.05 to the US dollar at the end of the year as capital flows improved,” it said.
RHB Research said Bank Negara Malaysia’s (BNM) foreign exchange reserves rose by a marginal US$0.1 billion to US$97.8 billion as at Oct 31, 2016 from US$97.7 billion registered at end-September, 2016.
It said the amount of total foreign currency deposits slipped by 4.5% in September to about RM116.5 billion following a gain of 3.6% in August.
Meanwhile, deposits by financial institutions grew at a slower pace in September, partly mitigated by a rebound in deposits of statutory agencies, it said.
“The amount of excess liquidity mopped up by BNM fell to an estimate of RM139.7 billion as at end-October 2016, from RM143.8 billion at end-September, 2016,” it said.