KUALA LUMPUR, March 16 — The ringgit is likely to stay weak, in cautious trading, next week, hovering around RM4.1197 versus the US dollar.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said investors would be looking out for the release of February’s Consumer Price Index (CPI) on March 22, which will likely pressure Bank Negara Malaysia to reduce its Overnight Policy Rate (OPR) further.
“February’s CPI is likely to record an estimate 0.7 per cent decline, making it the second month in a row of deflation,” he told Bernama.
Malaysia’s inflation, as measured by the CPI declined to 0.7 per cent in January 2019, the first since November 2009 when the CPI fell 0.1 per cent.
In addition, he said investors are also looking forward to the outcome of the Federal Open Market Committee meeting, scheduled next week from March 19 to 20 for the latest direction on US interest rates.
Meanwhile, Lukman Otunuga, a research analyst at FXTM, expects the ringgit to see resistance at the RM4.100 level and support at RM4.0615.
“While the ringgit carved out a one per cent, year-to-date, gain against the greenback, more dollar weakness may be harder to come by moving forward, with US economic fundamentals appearing resilient in the face of deteriorating global growth conditions.
“Should February’s CPI index turn out to be positive, that may remove the “noise” from January’s deflation and allay concerns surrounding domestic price pressures, allowing Bank Negara Malaysia to stand pat on the OPR through 2019,” he added.
However, the downside risk to the ringgit’s performance would be global market optimism remaining capped by expected delays to global risks such as the US-China trade deal, Brexit and slowing global growth.
During the week, the ringgit remained range-bound with trading confined between 4.078 and 4.095 against the greenback with buying supported by better-than-expected industrial production in January and Brent futures which breached US$68 (RM278.26) per barrel.
For the week just-ended, the ringgit closed unchanged against the US dollar as weak sentiment persisted due to bearish external leads.
On a Friday-to-Friday basis, the ringgit was also flat at 4.0890/0940 from 4.0890/0930 against the US dollar.
It declined against the Singapore dollar to 3.0197/0245 from 3.0064/0104 last Friday, slipped against the euro to 4.6287/6360 from 4.5842/6895 and depreciated versus the British pound to 5.4220/4307 from 5.3509/3577.
The ringgit, however appreciated against the Japanese yen to 3.6623/6671 from 3.6798/684. — Bernama