KUALA LUMPUR, May 4 — The ringgit is expected to trade in cautious mode against the US dollar next week as investors remain concerned over outlook for the local and global financial markets, a dealer said.
“Markets have been pricing in a cut to the overnight policy rate (OPR), after the central bank said in March that it was “building policy space and buffers pre-emptively”.
With the noise surrounding “deflation” having receded, BNM may focus on external downside risks to the domestic economy in ensuring its accommodative policy stance.
“Should the OPR be lowered, it may weigh on the ringgit in the near-term, although a 25-basis-points cut should help boost domestic demand, a key anchor for Malaysia’s growth,” Tan told Bernama.
However, he said, rising expectations for an imminent US-China trade deal may boost overall risk sentiment and help strengthen the local currency, helping it move towards the lower end of the 4.10-4.15 trading range against the greenback.
“The US dollar-ringgit consolidated within a tighter 4.13-4.14 range for most of this week, as Asian currencies saw contrasting fortunes against the greenback amid holidays in China and Japan.
“With the US dollar’s resilience weighing on many Asian currencies, the ringgit is certainly not spared from extraneous factors, that may make gains harder to come by moving forward,” Tan added.
He said however, Malaysia could rely on its domestic economic fundamentals to push back against the dollar tide, given its “brighter” Nikkei Malaysia PMI numbers and the rebound in March’s external trade data.
For the week-just-ended, the ringgit traded flat to easier in tracking among others, global crude oil prices, the consumer price index, as well as Bank Negara’s upcoming interest rate announcement.
On a Friday-to-Friday basis, the ringgit eased to 4.1410/1440 against the US dollar from 4.1310/1340 previously.
It weakened against the Singapore dollar to 3.0355/0379 from 3.0306/0332, and versus the Japanese yen, dropped to 3.7142/7179 from 3.6966/6997.
However, the ringgit went down against the British pound to 5.3792/3843 from 5.3302/3362, and depreciated vis-a-vis the euro to 4.6185/6230 from 4.6007/6044. — Bernama
Source: The Malay Mail Online