THE National currency is anticipated to trade cautiously against the US dollar in the coming week, as market participants await the release of the Federal Open Market Committee (FOMC) meeting minutes on February 20.
Traders will closely assess any indications from the US Federal Reserve (Fed) regarding the future direction of monetary policy, particularly concerning potential changes to interest rates.
Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, told Bernama that market sentiment would hinge on whether the Fed plans to ease its monetary policy this year.
He emphasised that the Federal Reserve is unlikely to reduce the federal funds rate (FFR) in the immediate future, given that the current FFR remains restrictive.
The Fed is expected to prioritise achieving its 2% inflation target, especially after recent US inflation data came in higher than anticipated.
Against this backdrop, the ringgit could test the immediate support level of RM4.43 in the coming week, according to Afzanizam.
Over the past week, the ringgit showed volatility, fluctuating between gains and losses, partly driven by concerns over policy uncertainties under the administration of US President Donald Trump.
However, the local currency managed to recover from oversold conditions and ended the week on a stronger note, buoyed by positive economic indicators from Malaysia, particularly a strong performance forecast for the country's 2024 gross domestic product (GDP).
On a Friday-to-Friday basis, the ringgit appreciated to 4.4310/4385 against the US dollar, up from 4.4375/4420 the previous week.
Despite this rebound, the ringgit weakened against several major currencies. It slipped against the British pound, trading at 5.5769/5863 compared to 5.5278/5334 the previous week, and declined against the euro, settling at 4.6437/6515 from 4.6101/6148.
On a positive note, the ringgit strengthened against the Japanese yen, rising to 2.9048/9099 from 2.9217/9249.
The ringgit also faced pressure against most ASEAN currencies. It depreciated against the Indonesian rupiah, trading at 272.6/273.2 from 272.4/272.9, and weakened against the Singapore dollar, moving to 3.3055/3113 from 3.2866/2901.
Additionally, the local currency edged down against the Philippine peso to 7.66/7.68 from 7.65/7.66.
However, the ringgit saw a modest gain against the Thai baht, appreciating to 13.1761/2059 from 13.1853/2041.
As global markets await the FOMC minutes next week, the ringgit’s performance will depend on evolving expectations around US monetary policy, as well as Malaysia’s economic outlook. – February 16, 2025
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