GE result aside, the focus of the week will be on the US FOMC minutes that should provide a clearer picture of the interest rates outlook
THE ringgit slipped further against the US dollar this morning, extending last week’s downtrend, as the first-ever hung Parliament outcome in Malaysia from the 15th General Election (GE15) held last Saturday shook investor confidence, an analyst said.
At 9am, the local note slid 290 basis points (bps) to 4.5780/5880 against the US dollar from last Thursday’s close of 4.5490/5565.
The market was closed last Friday to enable voters to cast vote in GE15 on Saturday.
However, SPI Asset Management MD Stephen Innes reckons that the market would take the GE results in stride given that the hung government was expected.
“So, expect more political horse-trading and compromise in such a setting, which could provide checks and balances, with the focus on the formation of the next government.
“However, from the market’s perspective, the GE15 results may fail to ease concerns over the recent phase of political instability, which had been hanging as a dark cloud over Malaysian capital markets,” he told Bernama.
GE15, the most intense GE the country had ever faced, has ended in a hung Parliament with no party securing a clear majority to form a new federal government.
Innes noted that investors have been shrugging off the hawkish US Federal Reserve interest rate hike decisions and peering down the China reopening-looking lens, which should be favourable for local capital markets.
“Also, any weakness in the US Dollar Index should encourage exporters to pare down their accumulated US dollar holdings and be a driver of the ringgit’s strength,” he added.
Ambank Research said the focus of the week would be on the US Federal Open Market Committee (FOMC) minutes that should provide a clearer picture of the interest rates outlook.
“Therefore, we expect the ringgit to trade between our support level of 4.550 and 4.560 while resistance is pinned at 4.600 and 4.610,” it said.
Meanwhile, the ringgit traded lower against a basket of major currencies.
It fell versus the Singapore dollar to 3.3280/3358 from last Thursday’s close of 3.3091/3150, depreciated against the euro to 4.7222/7325 from 4.7146/7224, eased vis-a-vis the Japanese yen to 3.2628/2701 from 3.2581/2637 and down versus the British pound to 5.4323/4441 from 5.4069/4159 previously. – Bernama / pic TMR File