KUALA LUMPUR – The ringgit is expected to continue its upward momentum and trade between 4.0550 and 4.0750 against the US dollar next week on improved appetite for the local currency supported by rising oil prices, said an analyst.
Axi chief global market strategist Stephen Innes said oil prices bounced higher as the Opec+ production decision meeting was great news for the ringgit due to Malaysia being a net exporter of crude oil and petroleum products.
“However, the market has turned a bit bullish cautious on Monday’s Brexit decision, but I suspect once the hurdles have been cleared, we could see the ringgit to test the 4.05 level next week if oil prices remain firm,” he said.
Meanwhile, FXTM market analyst Han Tan said the ringgit counted itself among Asia’s gainers versus the US dollar, as the Malaysian currency wrapped up a sixth consecutive weekly advance this week.
“Emerging market currencies have benefitted from the risk-on sentiment that has permeated global financial markets, as the global population embarks on its journey towards Covid-19 immunity.
"The recent Opec+ deal also helped send oil price higher, with Brent futures hitting a new nine-month high while buffering support surrounding commodity-linked currencies, including the ringgit," he said.
Tan said risk-taking activities may also be buffered by the expected Food and Drug Administration approval for Pfizer’s vaccine, which was likely to aid the US economic recovery’s prospects.
A better-than-expected print for China’s November external trade figures on Monday could also bolster sentiment surrounding Asian assets, he said.
“As long as risk-on sentiment stays unperturbed, it’s reasonable to expect the ringgit to make further inroads against the US dollar, with the 4.05 level being the next key marker.
“However, should the existing risk-on market narrative be derailed, the ringgit may rapidly unwind back towards 4.10,” Tan said.
On Friday-to-Friday basis, the ringgit was broadly higher against the US dollar at 4.0580/0620 against 4.0670/0710 in the previous week.
Meanwhile, the ringgit was traded mostly lower against other major currencies.
It fell against the Singapore dollar to 3.0461/0498 on Friday from 3.0380/0431 a week earlier, fell vis-a-vis the British pound to 5.4698/4772 from 5.4319/4389 and depreciated versus the euro to 4.9366/9430 from 4.8479/8543.
However, the local currency soared versus the Japanese yen to 3.9023/9080 from 3.9083/9133 on Friday last week. – Bernama, December 5, 2020
