KUALA LUMPUR: BMI Country Risk and Industry Research has foreseen the Malaysian ringgit to continue to strengthen in the second half of 2024 and early 2025, reaching Malaysian ringgit (MYR) 4.40/USD by end-2025.

The Fitch Solutions unit said in its recent note that the key driver will be further policy loosening worth 150 basis points, which will take the US Federal Reserve funds rate down to 3 percent by December 2025.

Other factors including Malaysia's sustained current account surplus and resilient foreign investment inflows will also provide underlying support to the ringgit.

"Over the medium term, we hold a positive view on the ringgit as narrowing yield differentials with the United States will bring the currency back onto a more stable footing," the research house said.

BMI, however, has revised the ringgit end-2024 forecast from MYR 4.40/USD to a weaker MYR 4.55/USD to account for the currency's performance in the first quarter.

"Despite this revision, our view for the ringgit is positive, and we expect the unit to trade sideways to stronger and to touch trend line support around the MYR 4.67/USD level by the first half," the research house said.

It is noted that the ringgit has been on a broad weakening trend since the start of the year and touched support at the MYR4.80/USD level in February.

While it has since regained some lost ground, the ringgit is down 2.9 percent against the US dollar year to date, ranking it among the poorest-performing emerging market currencies in Asia.