The ringgit is expected to recover gradually as the currency has overshot on the downside from its fundamental value, said RHB Research Institute.

This followed the continued fund inflow into the country which had pushed the foreign exchange (forex) reserves to grow by US$900 million to US$98 billion, as at June 30, 2017.

However, it said in ringgit terms, the country's forex reserves dropped RM8.5 billion to RM424.8 billion over the same period, after adjusting for exchange rate translation losses.

"The ringgit retraced marginally in early July, as global major central banks stepped up talks of tighter monetary policy conditions and the US Federal Reserve increased interest rates on June 15," said the research firm in a note today.

Forex reserves remained adequate by international standards and at the current level, Malaysia’s forex reserves were sufficient to finance 7.9 months of retained imports and cover 1.1 times the short-term external debt of the nation.

"The amount of excess liquidity – including repurchase agreements (REPO) – mopped up by Bank Negara Malaysia (BNM) fell in June.

"”This was due to the drop in the central bank’s interbank borrowings, repos and the issuance of BNM bills," it said.

- Bernama