The Malaysian ringgit is counted at a currency exchange office in Kuala Lumpur. (Photo: AFP/VNA)

Kuala Lumpur – An official of Malaysia’s central bank expected the country's ringgit to trade higher on the back on positive economic prospects.

Governor of Bank Negara Malaysia (BNM) Abdul Rasheed Ghaffour said the ringgit is currently undervalued but ought to be traded higher thanks to Malaysia’s positive economic fundamentals and prospects.

The currency hit a 26-year low on February 20 to trade at 4.80 MYR per USD.

Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, noted the local note’s fair value is closer to 3.90 MYR per USD, pointing out that the ringgit has been hovering below 100 points on both the Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) indices.

Theoretically, the ringgit should move towards its fair value. However, at the current juncture, the forex market is too distorted by external factors, leading the ringgit to deviate from its fair value of 3.90 MYR per USD, he added.

Afzanizam held that Malaysia’s current account surplus at 1.2 per cent of gross domestic product (GDP) is one of the factors that could strengthen the ringgit.

Tan Teng Boo, managing director of Capital Dynamics Asset Management Sdn Bhd, forecast the ringgit could trade at 4.20 - 4.40 per USD by the end of 2024 in view of a potential interest rate cut by the US Federal Reserve this year.

The ringgit has lost close to 4 per cent in value to its lowest level since January 1998. Meanwhile, regional currencies like the Korean won and Taiwanese dollar depreciated by 0.2 per cent and 0.3 per cent, respectively.