KUALA LUMPUR, April 11 — The ringgit is likely to strengthen further against the US dollar next week following the government’s move to let selected economic sectors to resume operations in stages during the movement control order (MCO) period and due to a possibility of the greenback moderating further, said analysts. 

FXTM market analyst Han Tan said the ringgit is expected to test the 4.25 level against the US dollar if the greenback moderates further or if risk-on mode could take stronger hold in global markets. 

"However, a sudden surge in risk aversion could push ringgit/US dollar back above 4.35 level,” he told Bernama. 

Meanwhile, Tan said Malaysia’s February industrial production data is expected to post an on-year growth of 0.9 per cent, although the backward-looking data is not expected to have a major bearing on sentiment over Malaysian assets.

He noted that risk sentiment could also be swayed by the hard data out of major economies over the week ahead, as investors weigh up signs of economic turmoil against the support measures that have been rolled out by policymakers. 

"Investors’ stomach for risk will be tested against the incoming prints, such as the US March retail sales which is set to see its sharpest-ever drop, as well as China’s economic growth for the first quarter of 2020, which likely saw a contraction,” said Tan. 

Further signs of a rapid deterioration in the world’s largest economies could spur more risk aversion in the markets, especially if current stimulus measures are deemed to be inadequate, he added.

Meanwhile, another dealer said all eyes were set on the outcome of the G20 energy ministers’ virtual meeting held on Friday after an oil production cut between OPEC and its allies to boost prices hit an impasse as Mexico rejected the proposed curb. 

The ringgit strengthened against the US dollar to 4.3050/3150 on Friday from 4.3520/3620 a week earlier.

 On Friday, Prime Minister Tan Sri Muhyiddin Yassin announced the government’s decision to extend the MCO until April 28.

He added that selected economic sectors would be permitted to resume operations in stages, and that the sectors would be determined by a special cabinet committee co-chaired by two senior ministers.

On a Friday-to-Friday basis, the local currency performed mostly lower against a basket of currencies.

It was weaker against the Singapore dollar at 3.0417/0498 from 3.0319/0399 a week earlier and appreciated to 3.9696/9799 versus the Japanese yen from 4.0118/0221. 

However, the local note fell against the euro to 4.7114/7236 from 4.7049/7175 previously, and slipped vis-a-vis the British pound to 5.3709/3851 from 5.3495/4631. — Bernama