KUALA LUMPUR: The ringgit is expected to trade higher next week backed by strong domestic fundamentals and higher oil prices, but still exposed to external uncertainties.
FXTM Research Analyst Lukman Otunuga said downside risks could be offset by resilience in domestic demand, manageable inflation and steady economic growth.
“Several local key indicators will be announced next week, including the foreign reserves data, followed by December’s inflation data. The latest CPI reading comes ahead of Bank Negara Malaysia’s (BNM) first Overnight Policy Rate decision for 2019, slated for Jan 24,“ he told Bernama.
He also said the central bank is likely to stand pat on the benchmark interest rate at 3.25 per cent for 2019, in contrast to the tightening bias seen last year in neighbouring central banks.
“Global growth is expected to see downward pressure as the year progresses, which could feed into Malaysia’s economic outlook.
“Domestic inflation, meanwhile, is expected to remain manageable in 2019 and is one of the reasons why BNM feels no real pressure to change monetary policy in either direction,“ Lukman added.
However, he said, investors would still keep a close eye on external factors that have a greater influence over the ringgit, such as US monetary policy, US-China trade tensions, China’s economic slowdown and Brexit uncertainties.
“These future events may also weigh on global sentiment in the near-term, which may put further pressure on emerging market currencies, including the ringgit,“ he said.
The ringgit is expected to trade between 4.10 to 4.12 next week.
On a Friday-to-Friday basis, the local note eased to 4.1100/1150 from 4.0940/0980 against the greenback.
It slid against the Singapore dollar to 3.0301/0342 from 3.0297/0338 and declined against the British pound to 5.3179/3248 from 5.2203/2270.
Against the Japanese yen, the ringgit jumped to 3.7507/7559 from 3.7785/7832 and appreciated against the euro to 4.6842/6903 from 4.7155/7217.
The Malaysian market will be closed on Monday for Thaipusam. — Bernama
Source: The Sun Daily