PETALING JAYA: The ringgit’s recent decline against the US dollar is expected to be transitory, despite the currency’s exposure to external factors, said FXTM market analyst Han Tan.
“The Malaysian currency remains exposed to broader risk sentiment driven by external factors such as trade tensions between major economies and slowing global economy. However, the ringgit’s recent decline against the US dollar is expected to be transitory, as Malaysia’s robust fundamentals continue supporting the ringgit,” he said in a commentary today.
He said Malaysia’s March inflation data, which is due on Wednesday, will show whether prices have rebounded from the deflation recorded in the first two months of the year, where a meaningful return to inflationary territory could offset the ringgit’s weakness against the US dollar.
“Overall, we expect Malaysia’s price pressures to remain manageable throughout 2019, allowing domestic consumption to continue driving growth,” he added.
He said the selling momentum on the ringgit of late is likely to subside in the week ahead while major economic releases out of the US and China, as well as potential headline risks, could also lead to short-term movements for USD/MYR within the 4.10-4.15 range.
Next week, global investors will turn their attentions towards the first quarter US gross domestic product (GDP) due on Friday, April 26.
Tan noted that growth forecasts have been revised upwards following February’s trade deficit which surprised markets when it fell to an eight-month low.
“A GDP print that exceeds market expectations above the 2% mark could give the Greenback an immediate leg up, while potentially offering further relief over the broader global outlook,” he said.
Source: The Sun Daily