KUALA LUMPUR – The ringgit is expected to weaken against the United States dollar next week at between 4.10 and 4.15, in line with concerns about US inflation and the release of consumer price index (CPI) data on Wednesday.
Oanda senior market analyst for Asia Pacific Jeffrey Halley told Bernama that with markets on the edge over inflation, a high print by the US CPI could spur a jump in bond yields and lift the greenback in the coming days.
“In such a scenario, the ringgit is likely to trade lower over the course of the next week, although holidays will mute trading volumes.”
He said a lower CPI print will alleviate inflation, risk and dollar pressures, but could see a vigorous opposite move if this does not happen.
Meanwhile, SPI Asset Management global managing partner Stephen Innes said the dollar will not strengthen too much on the broader landscape with the Federal Reserve anchoring short-term interest, and ultimately, it could limit the ringgit sell-off.
“However, until we see a healthy positive bend on the local (Covid-19) epidemic curve, investors will continue to shy away from the local unit.”
Nevertheless, he said, the ringgit could trade on a more favourable target, especially with palm oil and other commodity prices trading firm if the movement control order proves effective.
He expects the ringgit to hover between 4.11 and 4.14 next week.
According to Bank Negara Malaysia, the local note is expected to remain exposed to periods of heightened volatility, as uncertainties remain on the momentum of the global and domestic economic recovery.
The ringgit depreciated 3.5% against the dollar in the first quarter of the year, mainly due to the strengthening of the greenback, which also resulted in a broad-based weakening of other advanced and emerging market currencies.
On a weekly basis, the ringgit weakened versus the dollar to 4.1230/1280 from 4.1100/1140.
It was also lower against other major currencies.
It fell against the Singapore dollar to 3.1023/1073 from 3.0870/0916 a week ago, and depreciated against the Japanese yen to 3.7909/7966 from 3.7662/7702.
The ringgit slipped vis-a-vis the British pound to 5.8279/8353 from 5.7203/7267, and decreased against the euro to 5.0028/0102 from 4.9632/9697. – Bernama, May 15, 2021
