Ringgit to trade in tight range against US dollar next week

by BERNAMA / pic by TMR FILE 

KUALA LUMPUR – The ringgit is expected to trade in a tight range with a downward bias within 4.19 to 4.21 against the US dollar next week as the ongoing war in Ukraine could potentially impact market sentiments, an analyst said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said, however, an intermittent appreciation of the ringgit is also possible given that the Brent crude oil price has remained at elevated levels of over US$100 per barrel.

He said with the clear marker and guidance from the United States Federal Reserve (Fed) over the interest rate hike, it seemed that the market has become more certain and convincing that the economic recovery has proceeded quite well.

The US Federal Open Market Committee (FOMC) on Wednesday decided to raise the Fed fund rate by 25 basis points, bringing the benchmark interest rate to 0.50 per cent.

“However, the tail risks which are low probability but high impact such as the war in Ukraine could potentially sway market sentiments,” he told Bernama.

Meanwhile, the Regional Comprehensive Economic Partnership (RCEP) agreement has officially come into force for Malaysia Friday, paving the way for the country to integrate into the world’s largest free trade agreement that involves 15 countries, with a total population of more than 2.2 billion.

Mohd Afzanizam said it could provide a fillip to the local market as the trade pact will allow better access to new markets.

“At the same time, it enables our businesses to diversify their sources for raw materials, alleviating the risk of over concentration in one particular country.

“It could also incentivise the local players to upgrade their skills and productive capacity to compete with the RCEP member countries,” he said.

On a weekly basis, the ringgit was marginally higher at 4.1930/1975 against the greenback from 4.1940/1975 a week ago.

The local currency was traded mixed against a basket of major currencies on a Friday-to-Friday basis.

It rose against the Japanese yen to 3.5259/5300 from 3.5858/5891 and fell against the British pound to 5.5100/5159 from 5.4828/4874.

The local unit depreciated vis-a-vis the euro to 4.6370/6420 from 4.5991/6030 and eased against the Singapore dollar to 3.0924/0960 from 3.0802/0832 a week earlier.