KUALA LUMPUR, May 23 — The ringgit is expected to trade sideways next week, tracking the performance of other emerging market currencies as tensions between Washington and Beijing intensify along with recession fears.
An analyst said this, combined with the global economic slowdown, ongoing Covid-19 health pandemic as well as volatile oil prices, would put the local currency under pressure.
She also said that the sharp drop of the Leading Indicator (LI) for March 2020, the largest since November 1991, would continue to put the squeeze on the ringgit.
The Department of Statistics Malaysia (DOSM) said yesterday that based on the previous global economic crises, it found the expectation of LI for the next four to six months to reflect the forthcoming reality of an economic recession.
“The ringgit could touch base with 4.40 next week due recession fears and the escalation of Sino-US trade spat,” she said.
The analyst noted that the United States was already facing deep recession as unemployment skyrocketed due to the pandemic which led to a looming mortgage crisis.
“A global economic crisis is waiting to happen and now we are at the slopes. The trade tension would worsen the situation further,” she said.
The market will be closed until Tuesday in conjunction with Hari Raya Aidilfitri.
Trading will resume as usual on Wednesday in a holiday-shortened week.
Over the week, the ringgit started on an upbeat momentum as the country had managed to contain the virus spread, maintaining its high level of patients recovery.
However, it took a turn on Thursday as US President Donald Trump, in a series of tweets, suggested that China’s leader Xi Jinping was behind a “disinformation and propaganda attack” on the United States and Europe, putting the trade deal signed in mid-January at risk.
China, through its premier, meanwhile has reiterated its pledge to implement the first phase of its trade deal with the US despite setbacks from Covid-19 as tensions escalate between the world’s two biggest economies.
On a weekly basis, the ringgit ended mostly lower against a basket of currencies.
It weakened against the US dollar to 4.3610/3690 yesterday from 4.3480/3540 a week earlier and slipped against the euro to 4.7562/7667 from 4.7011/7084
The local currency was slightly higher versus the Japanese yen at 4.0567/0653 from 4.0605/0673 a week ago, but edged down against the Singapore dollar to 3.0638/0698 from 3.0542/0591 and depreciated slightly against the British pound to 5.3078/3118 from 5.3067/3154. — Bernama
