KUALA LUMPUR, Feb 13 — The ringgit is expected to trade higher against the US dollar next week, amid the continued weakness of the greenback on the back of various developments in the market which is affecting the currency.
A softer-than-expected US inflation data, declining yields in the US bond markets, and a better tone in risk complex is not supporting the US dollar, analysts said.
Axi chief global market strategist Stephen Innes said the dollar could slide a little more next week as the US Federal Reserve (Fed) continued to beat the dovish drum.
“However, crude oil prices may correct lower as the market starts to factor in more production coming back online as prices rise which might affect the ringgit uptrend.
“Despite that, the ringgit could still improve even in a very low liquidity Chinese Lunar New Year environment. Many think we are on the cusp of a super commodity cycle thanks to the US stimulus package,” he told Bernama.
Meanwhile, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said external developments looked positive for the ringgit.
He said Fed chair Jerome Powell’s reiteration to keep interest rates low, and the US Core Consumer Price Index for January released on Wednesday which was unchanged and below expectation, were signalling that accommodative monetary policy is here to stay.
“But the rise in crude oil prices may stoke some concerns that the Fed might change its tact in the following month.
“Locally, going forward, the economy will continue to depend on the duration of the Movement Control Order implementation and the swift rollout of the vaccine. This will determine the pace of the reopening of the economy which would support the ringgit,” he added.
The market will be closed tomorrow (Friday) in conjunction with the Chinese New Year holiday.
On a Thursday-to-Friday basis, the ringgit was higher against the US dollar at 4.0405/0445 versus 4.0680/0730 last Friday.
However, the local note was traded lower against other major currencies.
It depreciated against the Singapore dollar to 3.0499/0531 from 3.0415/0455 a week earlier, and weakened against the Japanese yen to 3.8602/8644 from 3.8570/8621.
The ringgit fell vis-a-vis the British pound to 5.5896/5964 from 5.5687/5772 a week earlier and was lower against the euro to 4.9003/9068 from 4.8714/8786 previously.
— Bernama
