The ringgit is expected to trade within a tight range of between 4.18 and 4.19 against the US dollar next week.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the geopolitical risks and concern over a sharp increase in the US Federal Reserve Fund Rate would dictate the currency market’s sentiments next week.
“The uncertainties over the conflict in Ukraine continue to hog the limelight as market participants are weighing in the latest developments and there also seems to be mixed vibes coming from US President Joe Biden’s administration and Russia.
“Despite that, back home, Malaysia’s exports in January continued to record double-digit growth of 23.5 per cent and similarly imports grew by 26.4 per cent,” he told Bernama.
He said the higher exports indicate that Malaysia is benefitting from the improving global demand while the double-digit expansion in imports shows that domestic activities have become more lively with imports of capital and consumption goods rising 37.7 per cent and 32.0 per cent respectively in January.
Mohd Afzanizam said it appeared Malaysia should be on track to register respectable growth this year given that both engines – external and domestic demand – will provide a boost to the overall gross domestic product growth.
Ringgit should be viewed positively but not in the meantime, he said.
Meanwhile, RHB Research in its note said while it is difficult to forecast how the Ukraine-Russia tensions would evolve and what is going to be the end-game, its view is that these geopolitical risks would linger for much of the first half of 2022.
“The US dollar against Asian currencies is likely to have one more leg up in the first quarter, before depreciating till end-2022,” it said.
On a weekly basis, the ringgit rose versus the US dollar to 4.1845/1870 from 4.1885/1910 a week ago.
The local currency traded mostly lower against other major currencies on a Friday-to-Friday basis.
The ringgit slipped against the Singapore dollar to 3.1149/1170 from 3.1148/1169 a week earlier, eased against the British pound to 5.7001/7035 from 5.6783/6817, and depreciated vis-a-vis the Japanese yen to 3.6340/6361 from 3.6089/6111.
However, when compared with the euro, it strengthened to 4.7578/7606 from 4.7686/7715.