KUALA LUMPUR – The ringgit is forecast to trade on a downward bias against the United States dollar next week, influenced mainly by external factors.
ActivTrades trader Dyogenes Rodrigues Diniz said given the expectations on US monetary policy, the most likely scenario would be the ringgit continuing to be pressured to hit 4.1750 as the first target and 4.2200 as the final projection over the next two to four months.
Although no changes have been made to interest rates, policymakers are beginning to change their minds about these rates, as well as US inflation and financial stimulus.
“Out of the 18 voting members, seven think that the US Federal Reserve must start hitting the brakes when it comes to the continuation of economic stimulus,” Diniz told Bernama.
“Although nothing has materially changed, the market is already pricing in these expectations, adding fuel to the US dollar’s strength.”
On a similar note, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said despite the positive sentiment over Malaysia’s Covid-19 vaccination progress, the said external factors, primarily the possibility of an earlier-than-expected rate increase by the Fed, will continue to drag emerging currencies, including the ringgit, lower.
“Amid the improving economic landscape in the US, the dollar is expected to strengthen further. With this in mind, the ringgit will likely trade between 4.13 and 4.15 to the dollar next week.”
Meanwhile, Oanda’s Asia-Pacific senior market analyst Jeffrey Halley said the local note may receive a boost from oil, which is expected to recover in the coming week.
There is also news that Brent crude could surge above US$80 (RM331.20) per barrel as pent-up demand unleased by the easing of the pandemic stokes global consumption. Global oil demand could hit a record high in August.
“I expect the ringgit-US dollar to test 4.15 early next week, before rallying to 4.16, and possibly, testing 4.18 if the dollar rally continues to gain strength,” said Halley.
On a weekly basis, the ringgit declined versus the greenback to 4.1380/1410 from 4.1070/1100.
However, it traded mostly firmer against other major currencies.
Against the Singapore dollar, the local unit improved to 3.0851/0875 from 3.1034/1059, but versus the yen, it dipped to 3.7570/7598 from 3.7500/7531.
The ringgit rose against the British pound to 5.7526/7568 from 5.8094/8140, and against the euro, it appreciated to 4.9308/9344 from 4.9908/9945. – Bernama, June 19, 2021
