KUALA LUMPUR, April 4 — The ringgit is likely to trade relatively stable against the US dollar next week at a range level of between 4.25 and 4.45, said FXTM’s market analyst Han Tan.
He said key drivers for the ringgit would include the greenback’s performance, oil market reaction to the Opec+ group of producers meeting and broader risk sentiment.
The Opec+ is made up of Opec (Organisation of the Petroleum Exporting Countries) and 11 non-Opec countries.
“The Opec+ meeting will focus on the oil markets, amid hopes that coordinated supply cuts would be enacted to help stabilise prices.
“Major oil producers must arrest the deteriorating fundamentals to shore up price sustainability. A firmer floor under oil prices could translate into more support for the ringgit’s performance over the immediate term,” he told Bernama.
Han Tan said however, said Covid-19 still rages in the global markets.
Even though China is set to relax its quarantine measures on Wuhan on Wednesday, it is expected to offer little comfort to global investors as the pandemic continues to ravage other major economies.
“With global recession fears now being confirmed by the incoming economic data, risk aversion is set to remain the dominant mode in global markets, which should keep up the downward pressure on Asian currencies,” he said.
Meanwhile, Han Tan said the currency markets are expected to see reduced volatility in the week ahead as the US Federal Reserve allows foreign central banks to swap US Treasuries for US dollars temporarily, starting Monday.
“While FX gyrations could be subdued, Asian currencies are expected to maintain its overall weaker bias considering that a global recession would lay bare the region’s economic vulnerabilities,” he added.
For the week just ended, the ringgit performance against the US dollar was kept mostly within the 4.30-4.38 range, as currency markets continued to react to the economic fallout from Covid-19.
The ringgit traded lower against the US dollar at 4.3520/3620 yesterday from 4.3280/3350 in the previous week.
Positive surprises ensued over Malaysia’s February 2020 external trade figures released last Friday, with both exports and imports showing year-on-year gains of over 11 per cent, respectively, that has somewhat helped cushion the ringgit from further depreciating.
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 3.0319/0399 from 3.0175/0234 a week earlier and eased to 4.0118/0221 from 3.9754/9829 versus the Japanese yen.
However, the local note improved against the euro to 4.7049/7175 from 4.7608/7702, but slipped vis-a-vis the British pound to 5.3495/4631 from 5.2841/2943 previously. — Bernama