The ringgit is expected to appreciate slightly while moving in a tight range at around 4.40 against the greenback next week on mixed market sentiments, said an economist.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said key data points from the United States (US) would be the core personal consumption expenditures (PCE) inflation for May as well as the house price index, that is the S&P Case Shiller Index, which is likely to stay elevated.
“The context will continue to revolve around rising inflationary pressures which necessitates the US Federal Reserve to remain hawkish in their monetary stance.
“The latest consumer price index print for Malaysia, which rose to 2.8 per cent in May 2022 from 2.3 per cent in May 2021, suggests Bank Negara Malaysia might incline to increase the overnight policy rate (OPR) in order to close the gap with the inflation rate,” he told Bernama.
He also said a possible OPR rise would provide some support to the ringgit although fear of a US recession is also mounting.
“Therefore, market sentiments will continue to remain guarded, leading to a tight range in the ringgit versus US dollar,” he added.
For the week just ended, the ringgit was traded mostly higher against the US dollar as the bearish outlook on the global economy prompted more investors to shift to emerging currencies.
On a weekly basis, the ringgit fell against the greenback at 4.4010/4045 on Friday compared with 4.4000/4040 a week earlier.
The local note, however, was traded mostly higher against a basket of major currencies on a Friday-to-Friday basis.
The ringgit appreciated against the Singapore dollar to 3.1710/1740 from 3.1753/1786 a week earlier, rose vis-a-vis the Japanese yen to 3.2590/2621 from 3.2655/2688 and gained against the British pound to 5.4128/4171 from 5.4208/4257 previously.
However, it depreciated versus the euro to 4.6444/6481 from 4.6314/6357 last week. — BERNAMA / Pic by MUHD AMIN NAHARUL