KUALA LUMPUR, May 2 — News on the reopening of economies across the globe coupled with the flattening of the Covid-19 infection curve are set to take centre stage next week, pushing the ringgit higher.
This is despite the disappointing economic data released recently.
“Survey data like (the US) Purchasing Managers Index are plunging as businesses become increasingly worried about their future prospects.
“Having said that, the US government keeps on adding more stimulus to support small businesses. The US Federal Reserve is also very committed to acting further to provide liquidity,” Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Bernama.
He said to a large degree, the move has alleviated concerns over the severe impact on the economy brought by the disease.
In addition, Afzanizam said the volatility index has also come off from more than 80 points in March to around 33 points.
The index still remains elevated but it has made a considerable improvement and as a result, the local currency has appreciated against various currencies on Thursday, reaching RM4.302 versus the greenback from RM4.345 on Wednesday.
It also appreciated against the Japanese yen and Singapore dollar.
The ringgit would likely make an attempt to break the RM4.30 level next week, but intermittently, there would be some profit taking along the way as economic numbers are expected to remain weak in the near term, he added.
The market was closed on Friday for Labour Day.
For the week just ended, the ringgit was traded mostly higher, tracking the external market sentiment, namely the US Fed’s decision to keep its interest rate near zero until the economy recovers, followed by the oil price rally due to the reopening of economies.
On Friday, benchmark Brent crude jumped 12.42 per cent to US$25.34 (RM108.90_) per barrel.
On a Thursday-to-Friday basis, the local currency was firmer against a basket of currencies.
It increased against the US dollar to 4.2950/2050 from 4.3600/3680 on Friday last week.
The local unit also strengthened against the Singapore dollar to 3.0461/0543 from 3.0594/0657 and appreciated versus the Japanese yen to 4.0253/0358 from 4.0494/0576 .
It rose vis-a-vis the British pound to 5.3675/3808 from 5.3741/3853 and was higher against the euro at 4.6639/6765 from 4.6927/7030. — Bernama
