Malaysian ringgit could push past 4.55 by end of Q1: Westpac

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The Malaysian ringgit could weaken further in the January-March quarter against the dollar, as a combination of external risks and domestic issues hover over the beleaguered currency, according to a Westpac analyst.

The currency pair traded at 4.48 on Tuesday morning. Last month, the ringgit fell to its lowest level since the 1998 Asian Financial Crisis and for full year 2016, the currency slipped 4.24 percent against the dollar.

Robert Rennie, who is global head of market strategy at Westpac, told CNBC's "Squawk Box" on Tuesday, "Expectations are for slower China through 2017, that's something that weighs on Malaysia clearly."

"Domestically, we have political issues," he added.

Rennie expects the ringgit to move up to 4.55 against the dollar by the end of first quarter of 2017.

In December, Mizuho Bank predicted the dollar/ringgit to hover at 4.30-4.7 in the same period.

HSBC's MD and co-head of Asian economic research, Frederic Neumann, also told CNBC on Tuesday Malaysia's shrinking current account surplus would likely make the ringgit more vulnerable this year. "It has already seen a weakening currency in the past year and that trend may continue."

Domestically, an ongoing scandal involving state development fund 1Malaysia Development Berhad (1MDB) could further shake up investor confidence, amid a series of ongoing global investigations into allegations that billions of dollars were looted from the fund.

The long-running scandal included allegations that diverted funds flowed to Malaysia's Prime Minister Najib Razak's personal bank account and to his stepson, Riza Aziz, whose company, Red Granite Pictures, produced the film The Wolf of Wall Street.

Najib, Riza and Red Granite Pictures have all denied wrongdoing.

On the broader front, Rennie pointed out a rise in U.S. yields could see pressure mounting in emerging Asia, which includes Malaysia.

"If U.S. yields continue to push through...towards 3 [percent] and potentially beyond that, then we start to see much stronger signs of capital flight from Asia."

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