KUALA LUMPUR: Standard Chartered forecast that the ringgit will be at 4.66 against the US dollar by the end of the second quarter (Q2) and 4.58 by the end of 2024.
In a report, the company said that Malaysia's commodity and electronics trade surpluses are expected to improve, while high foreign currency deposits onshore should provide a positioning boost once markets get clarity on US Federal Reserve (Fed) policy easing.
"Bank Negara Malaysia is actively engaging with government-linked companies (GLCs), government-linked investment companies (GLICs), resident exporters, and corporates to encourage repatriation and conversion of foreign investment income and hedging of foreign assets; it is also actively monitoring the conversion of export proceeds.
"We see these as important and supportive measures," it said.
The firm also expects Bank Negara to remain on a prolonged pause.
"We think the central bank will look past increases in headline inflation driven by administrative changes and subsidy rationalisation.
"We do not expect a shift in monetary policy to address foreign exchange weakness, which policymakers do not see as affecting the growth and inflation outlook at present.
"Growth momentum and core inflation have both moderated in recent quarters, with Q4 GDP growth coming in below expectations," it added.
Standard Chartered gave a "positive" outlook on Malaysian government bonds (MGS).
"We recommend that investors buy at the current yield-to-maturity of 3.50 per cent, with a target of 3.10 per cent and a stop-loss of 3.71 per cent."