HSBC foreign exchange head for the Asia Pacific region, Paul Mackel warned of volatility in Asian currencies especially the rupiah and rupee versus the US dollar.
Chinese renminbi, Taiwan dollar and Korean won are less volatile because of their stronger balance of payment positions.
The ringgit, which opened higher at RM3.18 this morning from yesterday's closing of RM3.21 to the US dollar, will see a bumpier ride next year, reaching the RM3.30 level by the end of the year compared to RM3.18 by the end of 2013.
"The dollar is turning higher against the Asian currencies as the the greenback moves to solid ground," he said at a media briefing in Kuala Lumpur Wednesday.
On ringgit, Mackel said "domestic thinking" like the general election and Budget 2014 should now remain in the rear view mirror as the forex will be impacted by external drivers especially the US market.
"We have been of the view of the ringgit will not be an out performer within Asia for some time because you have a thinning current account surplus and structural flows which are not as supportive of the currency as they once were.... the story is still intact."
Foreign investors are still heavily investing in the market, he said, pointing out that not much money was taken out from the bond market.
"But there is a source of volatility to the exchange rate should investors hedge the underlying portfolio risks and that is also something to consider."
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