KUALA LUMPUR: The ringgit is likely to trade higher next week, ranging from 4.10-4.15 against the US dollar, spurred by improved risk appetite for the local currency amid growing optimism over the recovery in global economic growth, dealers said.
The resumption of Bandar Malaysia project coupled with the anticipation of favourable March inflation data, which would give less pressure to Bank Negara Malaysia to make an adjustment to the interest rate, would lift sentiment for the ringgit, a dealer said.
“This will definitely boost appetite for the ringgit next week especially among foreign fund managers. Plus, given the currency’s recent depreciation, I think a buying spree might take place,” he told Bernama.
On Friday, Prime Minister Tun Dr Mahathir Mohamad announced that the government would reinstate the Bandar Malaysia project, which was abruptly terminated in May 2017. The proposed development in Sungai Besi, Kuala Lumpur, is expected to have a gross development value of RM140 billion.
He said Bandar Malaysia would have a significant impact on Malaysia’s economy and would serve as a global hub to further attract high impact global finance, technology and entrepreneurial firms.
“It will draw major international financial institutions, multinational corporations and Fortune 500 companies to locate their regional headquarters in Bandar Malaysia.
“In addition, tech giants such as Alibaba and Huawei have also manifested interest to establish their ICT (information and communications technology) centres,” he told a news conference on Friday.
Meanwhile, FXTM market analyst Han Tan said the March inflation data, due on Wednesday, would show whether prices had rebounded from the “deflation” recorded in the first two months of the year, whereby 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 said in a commentary.
Tan said the country’s robust fundamentals would continue supporting the ringgit.
For the week just ended, the ringgit traded mostly lower against the US dollar and hit a near three-month low of 4.1330/1360 against the US dollar on Wednesday following concerns over news that Malaysia might be dropped from the FTSE World Government Bond Index and the Norwegian sovereign wealth fund’s holdings.
The sell-off in the foreign exchange market lasted for two days but the market recovered on Friday as concerns eased.
On a Friday-to-Friday basis, the ringgit fell to 4.1300/1350 against the US dollar from 4.1120/1170 previously.
It also contracted against the Singapore dollar to 3.0473/0514 from 3.0367/0406 previously and versus the Japanese yen to 3.6898/6949 from 3.6744/6798.
However, the ringgit climbed against the British pound to 5.3707/3792 from 5.3760/3842 and strengthened vis-a-vis the euro to 4.6446/6506 from 4.6519/6596 previously. — Bernama
Source: The Sun Daily