Ringgit to trade on defensive mode against greenback next week

For the week just ended, the ringgit settled unchanged against the greenback at 4.1360/1400. — Reuters pic
For the week just ended, the ringgit settled unchanged against the greenback at 4.1360/1400. — Reuters pic

KUALA LUMPUR, Feb 15 — The ringgit is expected to continue trading on a defensive mode against the US dollar next week amidst global uncertainties in view of the latest developments in the Covid-19 outbreak, an analyst said.

FXTM market analyst Han Tan said for the week ahead, should the local note break meaningfully above its 100-day moving average of 4.14 level against the US dollar, driven by a sustained period of risk-off sentiment, a stronger resistance should arrive at its 200-day moving average of 4.15 level.

Malaysia’s January inflation print due next Friday is expected to come in at 1.8 per cent.

“With inflation pressures manageable, Bank Negara Malaysia has enough room to roll out further support measures, if the Covid-19 outbreak exerts a larger-than-expected impact on the domestic economy,” he told Bernama.

However, Tan said the prospects of more monetary policy easing could weigh on the ringgit’s performance.

For the week just ended, the ringgit settled unchanged against the greenback at 4.1360/1400.

Commenting on ringgit performance this week, Tan said the ringgit saw a topsy-turvy movement, nearly reaching the 4.15 level against the US dollar before reversing its course mid-week to strengthen below 4.13, only to end the week within that range.

“Asian currencies have been buffeted by concerns over the Covid-19 outbreak and the potential economic toll it is exerting on the region,” he said.

Although Malaysia’s lower-than-expected fourth quarter 2019 gross domestic product would likely weigh on the ringgit’s performance this week, investors’ concerns moving forward may be mitigated by the supportive measures, both fiscal and monetary, that policymakers are rolling out in order to buffer Malaysia’s economic fundamentals.

On a Friday-to-Friday basis, the local currency was traded mixed against a basket of currencies. 

It declined against the Singapore dollar to 2.9751/9797 from 2.9730/9769 last Friday and decreased against the British pound to 5.3904/3973 from 5.3466/3534.  

The local currency strengthened against the euro to 4.4851/490 compared with 4.5306/5354 last week and rose vis-a-vis the Japanese yen to 3.7665/7705 from 3.7672/7712 previously. — Bernama

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