KUALA LUMPUR – The ringgit is expected to trade higher against the United States dollar next week, amid the greenback’s continued weakness due to various developments in the market.
A softer-than-expected US inflation data, declining yields in US bond markets, and a better tone in risk complex are not supporting the dollar, said analysts.
Axi chief global market strategist Stephen Innes told Bernama that the currency could slide a little more next week, as the Federal Reserve continues to beat a 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 may affect the ringgit uptrend.
“Despite this, the ringgit could still improve, even in a very low-liquidity Chinese New Year environment. Many think we are on the cusp of a super commodity cycle, thanks to the US stimulus package.”
Meanwhile, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said external developments look positive for the ringgit.
He said Fed chair Jerome Powell’s reiteration on keeping interest rates low, and the US Core Consumer Price Index for January released on Wednesday, which was unchanged and below expectation, signal that an accommodative monetary policy is here to stay.
“But, the rise in crude oil prices may stoke some concerns that the Fed could change its tack in the following month.
“Locally, going forward, the economy will continue to depend on the duration of the movement control order and the swift roll-out of the Covid-19 vaccine. This will determine the pace of the reopening of the economy, which will support the ringgit.”
On a Thursday-to-Friday basis, the ringgit is higher against the US dollar at 4.0405/0445 versus 4.0680/0730.
However, the local note 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.
Against the British pound, it fell to 5.5896/5964 from 5.5687/5772, and is lower against the euro to 4.9003/9068 from 4.8714/8786 previously. – Bernama, February 13, 2021
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