Ringgit expected to strengthen against US Dollar next week

KUALA LUMPUR: The ringgit is expected to trend upwards against the US dollar next week, according to analysts.

According to Bernama, Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, believes the ringgit may attempt to breach the support level of 4.3000 if the US dollar continues to weaken following weaker employment data.

The US Non-Farm Payrolls (NFP) data released on Friday showed only 142,000 jobs added in August, significantly below the consensus estimate of 165,000 jobs, though it was an increase from the 114,000 jobs reported in July.

“We expect the ringgit to continue showing a healthy trend given the lower-than-expected NFP data, which is seen as a contributing factor to the ringgit’s performance.

“However, the market will also focus on key data next week, including the US Consumer Price Index (CPI) and Producer Price Index (PPI) to assess inflation, as well as Japan’s second-quarter 2024 Gross Domestic Product (GDP) and China’s CPI, trade, and new loans,” he told Bernama.

Meanwhile, Stephen Innes, Managing Director of SPI Asset Management, said that as the US job market cools, it could provide support for the ringgit.

“The ringgit’s position next week will depend on the NFP data, especially if it falls below 150,000 (lower than the consensus estimate of 165,000); this will help strengthen the ringgit,” he said.

From Friday to Friday, the ringgit fell to 4.3275/3330 against the US dollar from 4.3185/3225 the previous week.

The ringgit also traded lower against a basket of other major currencies.

The local unit fell against the euro to 4.8087/8148 from 4.7862/7906 last week, declined against the British pound to 5.7010/7083 from 5.6939/6992 previously, and weakened against the Japanese yen to 3.0296/0337 from 2.9754/9784 earlier.

The ringgit was also traded lower against ASEAN currencies.

It declined against the Singapore dollar to 3.3327/3372 from 3.3158/3191 and weakened against the Indonesian rupiah to 281.3/281.9 from 279.3/279.8 previously.

The local currency fell against the Thai baht to 12.9087/9305 from 12.7540/7726 and decreased against the Philippine peso to 7.74/7.75 from 7.69/7.70 the week before.