KUALA LUMPUR, Sept 7 — The ringgit is expected to rise moderately next week, driven by strong domestic fundamentals coupled with higher oil prices.
Axi Trader Asia-Pacific market strategist Stephen Innes said next week’s Bank Negara Malaysia (BNM) Monetary Policy Committee (MPC) meeting would be highly anticipated for the central bank’s policy decision.
“Several banks are suggesting the MPC will deliver a rate cut despite the second quarter gross domestic product (GDP) surprise, whereas others are thinking of a very dovish hold,” he told Bernama.
Bank Negara Malaysia is scheduled to hold its fifth Monetary Policy Committee meeting next Thursday (September 12).
On May 7, BNM reduced the overnight policy rate (OPR) by 25 basis points (bps) to three per cent, its first rate decrease since July 2016.
Innes opined that the rate cut could be viewed positively for the ringgit as the Malaysian economy has been resilient and this could improve equity sentiment and investments.
“Sentiment has improved dramatically in the course of such a short time, we may see a test of 4.1650 level if the Renminbi continues to strengthen via the People’s Bank of China (PBoC) guidance and no Twitter surprises from US President Donald Trump,” he said.
The PBoC said on its website it will cut the reserve requirement ratio (RRR) by 50 bps for all banks, with an additional cut of 100 bps for some qualified banks, effective Sept 16.
With this latest move, China’s central bank has cut the RRR seven times since early 2018.
The market will be closed on Monday in conjunction with the birthday of the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah.
The market will resume trading on Tuesday.
For the week just ended, the local note extended its strong performance against the US dollar on strong investor demand for the local currency.
The ringgit ended the week higher at 4.1780/1830 against the US dollar from 4.2030/2080 last Friday.
The local currency traded mostly higher against most other major currencies, except the pound.
The ringgit rose against the Singapore dollar to 3.0221/0261 from 3.0281/0319 last Friday, strengthened versus the yen to 3.9050/9101 from 3.9487/9545, and appreciated against the euro to 4.6079/6147 from 4.6393/6465 previously.
However, the ringgit depreciated vis-a-vis the British pound to 5.1385/1463 from 5.1230/1308. — Bernama