KUALA LUMPUR, Jan 20 — The ringgit is likely to continue trading at the 4.70 level against the US dollar next week, underpinned by an unfavourable risk environment marked by geopolitical uncertainty, the waning US Federal Reserve rate cut expectations, and China's lack of definitive stimulus measures.
Nevertheless, Kenanga Research has said the ringgit may benefit from a potential hawkish shift in the Bank of Japan's monetary policy direction, and if the US fourth-quarter 2023 (4Q 2023) gross domestic product data unfolds weaker than expected.
“Attention will also be directed toward the Personal Consumption Expenditures Price Index reading as investors search for indications of a cooling US economy.
“In addition, Malaysia's stable inflation outlook, stronger 4Q 2023 GDP estimate reading, and Bank Negara Malaysia's (BNM) commitment to maintaining the status quo may continue to support the ringgit,” it said in a note.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said next week, BNM’s Monetary Policy Committee (MPC) meeting on January 24 will be closely monitored.
The market would want to see the latest assessment by BNM given the ongoing conflict in the Red Sea and the Middle East and how that translates into the outlook on inflation and, ultimately, the monetary policy stance.
“On that note, the ringgit is likely to stay weak next week, possibly around 4.71 to 4.72 against the greenback,” he told Bernama.
For the week just ended, the local note was traded lower as the first rate cut by the Fed is seen to be the primary driver of the risk-off sentiment.
On a Friday-to-Friday basis, the ringgit was lower against the US dollar at 4.7160/7210 from 4.6455/6500 a week earlier.
The local unit also traded mostly lower against other major currencies.
It rose vis-à-vis the Japanese yen to 3.1871/1907 from 3.2007/2040 a week earlier but declined against the British pound to 5.9822/9886 from 5.9239/9297 and depreciated versus the euro to 5.1324/1379 from 5.0924/0973 at the previous Friday’s close.
The ringgit, however, was traded lower against a few Asean currencies.
It weakened versus the Singapore dollar to 3.5176/5216 from 3.4900/4936 a week ago and fell against the Thai baht to 13.2733/2941 from 13.2464/2664 previously.
The ringgit fell against the Indonesian rupiah to 301.9/302.4 from 298.6/299.1 on Friday last week and slipped against the Philippine peso to 8.43/8.44 from last week’s closing rate of 8.30/8.32.
— Bernama
