KUALA LUMPUR, April 25 — The ringgit is likely to trade range-bound next week despite a recovery in oil prices as global sentiment remains uncertain.
AxiCorp global chief market strategist Stephen Innes said following the extension of the movement control order (MCO) in the country until May 12, renewed concerns on demand-driven issues could come back to the fore.
“The MCO extension has lifted immediate economic concerns although the extension was not all that unexpected given the situation in neighbouring Singapore.
“This (extension) may weigh on the ringgit sentiment and support the US dollar to be broadly higher against a basket of currencies over the short-term period,” he told Bernama.
Meanwhile, FXTM market analyst Han Tan said the ringgit/US dollar is expected to remain supported above its 50-day moving average which currently resides at 4.2979.
“However, a sustained presence below 4.30, fuelled by sustained risk-on sentiment or US dollar weakness, could see the currency pair carve a path towards 4.25.
“Should US dollar-ringgit see a meaningful breach above the 4.40 psychological level, then the 4.45 resistance level is expected to be called upon again, as was the case on March 23,” said Tan.
Looking further ahead, he said should oil prices recover further in May as the Organisation of the Petroleum Exporting Countries plus (Opec+) supply cuts kick in and major economies reopen, it could translate into more support for the ringgit as well.
During the week’s trading, he said, the ringgit was able to overcome the turbulence in the oil markets to claim a 0.2 per cent advance against the US dollar.
The 4.40 level proved a reliable resistance level for the ringgit/US dollar yet again, as the Malaysian currency latched onto the rebound in oil futures and settled in the mid-4.30’s range ahead of the weekend.
Tan said Malaysia’s March Consumer Price Index (CPI) of minus 0.2 per cent should lower the bar for more monetary policy easing, as the central bank offsets the negative economic impact from Covid-19.
On a Friday-to-Friday basis, the local currency performed firmer against a basket of currencies.
It improved slightly against the US dollar at 4.3600/3680 from 4.3650/3750 on Friday last week.
The local unit also strengthened against the Singapore dollar at 3.0594/0657 from 3.0621/0702 but depreciated versus the Japanese yen to 4.0494/0576 from 4.0465/0562 last Friday.
It rose vis-a-vis the British pound to 5.3741/3853 from 5.4200/4342 and was higher against the euro to 4.6927/7030 from 4.7216/7338. — Bernama
