KUALA LUMPUR: The ringgit is in a good position to strengthen in 2024, propelled by structural reforms and positive growth prospects, said Bank Negara Malaysia (BNM) deputy governor Datuk Marzunisham Omar.

He expressed optimism that Malaysia's economy will grow between 4.0 per cent and 5.0 per cent this year from 3.7 per cent last year, buoyed by household spending and private consumption.

"The ringgit is undervalued. BNM has models to estimate the fair value of the ringgit. All our models consistently show that the ringgit is undervalued.

"The current value is mainly driven by sentiment which we believe ignores the fact that Malaysia has a positive growth prospect, moderate inflation and with the reforms that we are going to implement, (I believe) our economic competitiveness will improve and support the strengthening of ringgit," Marzunisham told reporters after the BNM Governor's Address on the Malaysian Economy and Panel Discussion, in conjunction with the release of the BNM Annual Report today.

He said the central bank is working with businesses, government-linked companies (GLCs), and corporates to encourage them to not only repatriate foreign earnings but also to convert foreign currencies. 

"We are seeing some positive support from them, and we hope that this behaviour will continue because this will provide the necessary flows into our foreign exchange market," he said.

Meanwhile, Malaysian Economic Association deputy president Professor Dr Yeah Kim Leng said the ringgit is likely to range between RM4.50 and RM4.60 by the end of 2024.

He said Malaysia's fundamentals underpinning the ringgit are also strengthening in terms of wider current account surplus and rising exports.

"Importantly, so-called sustained growth and investment are the key fundamentals supporting the ringgit value.

"We are positive that the ringgit will recover largely because of the reversal of the strong United States dollar given that the US economy is weakening and they need to cut interest rates," he said.

Yeah said the US Federal Reserve is expected to start easing interest rates by the middle of the year and they are projecting at least three cuts in 2024.

"If the US is reducing interest rates, it means that the US dollar will weaken and then our ringgit will strengthen on the back of a weakening greenback," he said. - Bernama