KUALA LUMPUR, July 6 — Bullish sentiment for the ringgit will likely push the local currency to perform better against the US dollar next week, trading at the level of between 4.1150 and 4.1450.
SPI Asset Management head of trading and market strategy Stephen Innes said the ringgit would benefit from an interest rate cut by the US Federal Reserve (Fed) and perhaps would perform even better if the reduction was by 50 basis points.
“My view is very much in the dovish interest rate camp given the weak global economic back drop.
“I expect volatility around the US non-farm payroll (NFP), but after that I expect the market to pivot dovish Fed, which should help the ringgit cause,” he told Bernama.
Similarly, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the Fed was likely seen to deliver a rate cut in the second half of this year and perhaps as early as this month.
“Apart from that, the recent cease fire on trade war between the US and China has, to some degree, injected optimism that the two nations would find some sort of amicable solution,” he explained.
Next week, BNM’s Monetary Policy Committee meeting will be held on July 9, 2019 with most economists expecting the overnight policy rate to remain unchanged at 3.00 per cent.
“As such, ringgit is poised to hover around RM4.12 and RM4.14 next week,” he said.
For the week just ended, the ringgit started in a weak note as dollar sentiment improved following a positive development in the US-China trade war where both economic powerhouses’ leaders agreed to a truce coupled with interest rate cut prospect by the Fed.
The local currency, however, rebounded on Wednesday as hopes for any near-term Sino-US trade deal faded while oil prices improved, before retreating on Friday weighed by cautious sentiment ahead of the NFP announcement.
On a Friday-to-Friday basis, the ringgit depreciated slightly to 4.1340/1370 from 4.1300/1350 against the US dollar.
However, the local currency was traded higher against most other major currencies.
The ringgit rose against the Singapore dollar to 3.0460/0493 from 3.0520/0568 recorded last Friday and strengthened versus the Japanese yen to 3.8267/8306 from 3.8354/8412.
It also improved against the British pound to 5.1882/1932 from 5.2352/2419 and increased vis-a-vis the euro to 4.6557/6607 from 4.7012/7085. — Bernama
Source: The Malay Mail Online