KUALA LUMPUR: The ringgit’s upward momentum is expected to continue next week, with the currency forecast to hit the 4.00-level against the US dollar as risk appetite improves amid a weaker greenback and recovery in commodity prices.
Phillip Capital Management Malaysia senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said the ringgit and other emerging currencies were set to take advantage of the easier US dollar, which is currently under pressure after the US Federal Reserve (Fed) decided to keep its interest rate unchanged.
The unexpected dovish stance taken by Fed chairman Jerome H Powell on Wednesday, signalled a possible end to interest rate hikes and sent the regional foreign exchange market into a rally.
“It’s quite a dramatic reversal because we were expecting a hike, but they put it on hold. This is indeed a positive surprise. I think our ringgit will strengthen further,” he told Bernama, projecting the ringgit to trade between 4.00 and 4.05 next week.
Nazri Khan also said easing political tension over Brexit coupled with optimism that US-China trade resolution may be at hand, would lend support to sentiment next week.
A 30-person delegation from Beijing, led by Chinese Vice-Premier Liu He, arrived in Washington on Wednesday for two days of talks.
The White House is represented by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.
It was reported that officials from both countries had a “good conversation” during the opening session.
During the holiday-shortened trading week, the ringgit finished at an almost three-week high of 4.0930/0980 against the US dollar on Thursday compared with 4.1225/1275 recorded last Friday, thanks to better demand and bullish trade data.
Malaysia’s total trade in 2018 remained resilient, expanding 5.9 per cent to RM1.876 trillion from RM1.771 trillion in 2017, due to stronger-than-expected export growth.
Meanwhile, the local currency was traded mostly lower against other major currencies.
The Malaysian market was closed on Friday for the Federal Territory Day.
It fell versus the Singapore dollar to 3.0409/0450 on Thursday from 3.0346/0385 last Friday, declined against the Japanese yen to 3.7699/7749 from 3.7542/7598 and weakened against the euro to 4.7000/0070 from 4.6704/6769.
However, the local currency rose vis-a-vis the British pound to 5.3688/3758 from 5.3935/4004 previously as market sentiment was weighed by the Brexit development. — Bernama
Source: The Sun Daily