KUALA LUMPUR, April 16 — The ringgit is anticipated to trade on a downward trend next week on lack of catalysts, analysts said.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said buying support for the US dollar was likely to strengthen as the US Federal Reserve was aggressive in the interest rate increase cycle and could raise 50 basis points at one go in the upcoming meeting on May 3-4.
Meanwhile, China’s fixation with the zero-Covid strategy is taking a toll on the supply chain which could create further delays in the production of finished goods as well as lower productivity globally.
Moreover, he said, the ongoing military conflict in Ukraine would exert pressures on commodity prices and hence inflation.
“So there are multiple factors that seem to negatively affect the economic recovery momentum.
“The International Monetary Fund will release its World Economic Outlook next week and the indication so far is they will downgrade the global growth projections for 2022 and 2023.
“All in all, the ringgit should stay weak and remain in a narrow range (versus the US dollar). It will continue to linger around the RM4.23 level,” he told Bernama.
According to him, further depreciation would be somewhat limited given that the ringgit is already at an oversold position based on the technical view.
“Next week, the Consumer Price Index for March will be out. We believe the figure might be higher than the 2.2 per cent recorded in February.
“We shall see what Bank Negara Malaysia’s latest assessment will be when officials meet for the Monetary Policy Meeting on May 10-11,” said Mohd Afzanizam.
Meanwhile, SPI Asset Management managing partner Stephen Innes echoed the same sentiment for the ringgit as global growth concern may overtake inflation worries and markets veer back on the recession procession.
“I think the ringgit could likely move between 4.2250 and 4.2450 next week, but we continue to keep an eye on China’s policy easing that should contain the current run of the ringgit’s weakness,” Innes said.
On a weekly basis, the ringgit was lower against the greenback at 4.2330/2380 on Friday compared to 4.2195/2230 a week earlier.
Meanwhile, the local unit traded mostly mixed against a basket of major currencies on a Friday-to-Friday basis.
The ringgit dropped against the Singapore dollar to 3.1198/1242 from 3.0953/0981 a week earlier but rose vis-a-vis the Japanese yen to 3.3465/3510 from 3.4004/4034.
The local currency weakened against the British pound to 5.5308/5374 from 5.5026/5072 last week but improved versus the euro to 4.5776/5830 from 4.5858/5896 previously.
— Bernama
