KUALA LUMPUR, Aug 19 — The ongoing uncertainties over China’s economic outlook will continue to influence the currency markets and drag the ringgit to trade in a tight range next week, said an economist.
The ringgit would likely stay within a narrow range between RM4.63 and RM4.65 against the US dollar as investors would prefer the greenback in light of the heightened economic uncertainties, opined Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid.
He said market players would closely watch for the Chinese government policy response as the People’s Bank of China (PBoC) decides its loan prime rate next Monday.
“Consensus estimates showed that the PBoC might cut another 15 basis points next week,” he told Bernama.
Meanwhile, Kenanga Research, in a note, said growing pessimism over China’s recovery, stemming from its economic distress and lack of stimulus support, may continue to weaken the yuan, subsequently pressuring the ringgit.
“However, the PBoC’s stronger-than-expected fixing and continued intervention by the state-owned banks may limit the yuan’s depreciation,” it said.
On the home front, the Department of Statistics Malaysia on Friday (August 18) said the country’s economy expanded by 2.9 per cent in the second quarter of 2023 (2Q 2023), bringing the average growth for the first half of the year to 4.25 per cent.
Malaysia’s economic growth moderated during the quarter, partly due to weaker external demand amidst the global technology cycle, lower commodity production and high base effect from 2Q 2022.
On a Friday-to-Friday basis, the ringgit was lower against the US dollar at 4.6465/6510 from 4.5865/5895 a week earlier.
The local unit was also traded lower against other major currencies.
It fell against the British pound to 5.9131/9189 compared to 5.8230/8268 the previous Friday, slipped versus the euro to 5.0503/0552 from 5.0351/0384 and depreciated vis-à-vis the Japanese yen to 3.1926/1959 from 3.1712/1735 previously.
Similarly, the ringgit was traded lower against its Asean peers.
The local unit eased against the Singapore dollar to 3.4228/4264 from 3.3967/3991 a week earlier and declined against the Indonesian rupiah to 303.9/304.2 from 301.3/301.6.
It was lower versus the Thai baht at 13.1331/1510 from 13.0737/0871 and weakened vis-à-vis the Philippine peso to 8.27/8.28 from 8.14/8.15 last Friday.