KUALA LUMPUR – The ringgit is expected to trade in a cautious mode next week, tracking the performance of other emerging market currencies and the trajectory of US bond yields, said analysts.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the ringgit depreciated by less than 0.5% this week to reach RM4.11 per US dollar yesterday as US Treasury yields continued to rise.
“For next week, the ringgit should trade in the range of RM4.10 to RM4.12 per US dollar, depending on the trajectory of bond yields,” he said.
Looking ahead, he said investors would also monitor closely the movement of bond yields after the benchmark US 10-year note climbed as much as 11 basis points to 1.75% – the highest since January 2020 – on Thursday.
“The People’s Bank of China will also be holding its meeting next week and investors will look closely if the central bank would implement monetary policy tightening as the economy improves,” he added.
On a Friday-to-Friday basis, the ringgit rose against the US dollar to 4.1050/1100 versus 4.1160/1200 a week earlier.
The local note also traded easier against other major currencies. It depreciated against the Singapore dollar to 3.0564/0603 from 3.0557/0593 a week earlier but strengthened against the Japanese yen to 3.7712/7762 from 3.7720/7760.
The ringgit also rose vis-a-vis the British pound to 5.7150/7228 from 5.7262/7326 on Friday last week and appreciated against the euro to 4.8813/8884 from 4.9050/9106.
Meanwhile, short-term rates are expected to remain stable next week on Bank Negara Malaysia’s operations to absorb surplus liquidity from the cash market.
During the week, the average Islamic overnight interest rate stood at 1.72%, while the one-, two- and three-week rates stood at 1.78%, 1.81%, and 1.85%, respectively.
For the week just ended, the central bank intervened on a daily basis to reduce excess funds from the financial system by conducting conventional money market tenders, Islamic range maturity auction Qard tenders, reverse repo tenders and Qard tenders.
The total liquidity surplus in the conventional system for the week fell to RM35.70 billion from RM36.83 billion in the preceding week, while in the Islamic system, it decreased to RM17.76 billion from RM18.63 billion previously. – Bernama, March 20, 2021
