Ringgit Expected to Trade Slightly Higher Against US Dollar Next Week
KUALA LUMPUR: The ringgit is expected to trade slightly higher against the US dollar next week as investors assess the outlook for United States (US) interest rates.
Bank Muamalat Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid said investors would focus on the US Consumer Price Index (CPI) and Producer Price Index (PPI) data for October, scheduled for release on Tuesday and Friday, respectively.
“Lower inflation readings could put pressure on US Treasury yields and the US dollar, providing support for the ringgit. However, higher-than-expected inflation could undermine those gains,” he told Bernama.
Domestically, Mohd Afzanizam said Malaysia’s industrial production, labour market, and wholesale and retail trade figures would provide further indications of the economy’s resilience.
He said Bank Negara Malaysia’s decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent provided policy consistency and stability.
“However, trading activity is expected to remain cautious as investors await the US employment report due to be released tonight, alongside developments in US policy following the midterm elections and geopolitical risks.
“Therefore, the ringgit is expected to trade within the RM4.04 – RM4.06 range against the US dollar next week,” he said.
Meanwhile, SPI Asset Management Managing Partner Stephen Innes said the ringgit could strengthen to higher levels if selling activity in equity markets intensified, prompting traders to factor in the possibility that the US Federal Reserve (Fed) would not raise interest rates.
“However, its next direction will once again depend on crude oil and equity markets rather than domestic fundamentals. If crude oil prices remain elevated and global equity markets continue to face selling pressure, particularly in the semiconductor sector, the ringgit may struggle to record further gains.
“For now, investors will be monitoring Wall Street and oil markets for clearer direction. As long as conditions in both markets remain unstable, Asian currencies, including the ringgit, are likely to remain under pressure,” he said.
Innes expects the ringgit to trade within a narrow range of RM4.045 to RM4.065 against the US dollar.
On a Friday-to-Friday basis, the ringgit weakened against the US dollar to 4.0565/0610 from 4.0555/0600 the previous week.
During the week just ended, the ringgit traded higher against a basket of other major currencies.
The local currency strengthened against the Japanese yen to 2.5616/5646 from 2.5782/5812 the previous Friday, rose against the British pound to 5.4304/4365 from 5.4461/4522, and appreciated against the euro to 4.5315/5365 from 4.5413/5464.
Meanwhile, the ringgit traded mostly lower against other ASEAN currencies.
The local currency strengthened against the Singapore dollar to 3.1657/1694 from 3.1753/1791 a week earlier.
However, the ringgit edged down against the Indonesian rupiah to 224.2/224.6 from 223.4/223.8, weakened against the Thai baht to 12.0898/1105 from 12.0373/0561, and declined against the Philippine peso to 6.43/6.44 from 6.36/6.37.
BERNAMA