Kenanga maintains ringgit forecast of RM3.95 to US dollar by year-end
KUALA LUMPUR: Kenanga Investment Bank Bhd (Kenanga IB) has retained its ringgit forecast of RM3.95 to the US dollar by year-end, underpinned by resilient growth, a sustained current account (CA) surplus and record foreign-currency deposits.
Kenanga Investment Bank Bhd has retained its forecast of the ringgit strengthening to RM3.95 against the US dollar by the end of the year. This projection is based on the bank's belief in resilient growth, a sustained current account surplus, and record foreign-currency deposits. The bank believes the US dollar's elevated level is likely a temporary risk-premium bump rather than a new trend, spurred by Middle East jitters and market reactions to potential Federal Reserve cuts.
The bank anticipates that once the Fed begins easing, the downward pressure on the US dollar will intensify. The nominal effective exchange rate weakened by 0.8 percent in the second quarter of 2026, despite the US dollar/ringgit pair remaining stable, indicating some trade-weighted weakness. Bank Negara Malaysia is expected to maintain the overnight policy rate at 2.75 percent through 2026, with inflation contained enough to prevent pre-emptive tightening.
Headline inflation rose to 1.9 percent in Q2 2026, driven by higher fuel prices, while core inflation eased. GDP growth of 6.0 percent in Q2 2026 surpasses Bank Negara's projected 4.0-5.0 percent range, but the central bank is expected to maintain policy flexibility.
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