KUALA LUMPUR, Aug 8 — The ringgit is likely to continue strengthening against the US dollar next week, riding on the upbeat unemployment rate data, anticipation of better-than-expected second-quarter (Q2) gross domestic product (GDP) data and a weaker greenback, dealers said.
Nevertheless, investors would keep an eye on the trade talk between high-level officials of the United States (US) and China, which would be held on August 15 to review the implementation of the Phase 1 trade agreement inked in mid-January.
AxiCorp chief global market strategist Stephen Innes said the ringgit was expected to remain in favour as the US real yields continued to fall.
He said the ringgit/US dollar would trade aggressively in the range of between 4.1750 and 4.1950 next week, with the low end sitting just above a longer term trend line.
However, if China reaffirmed its commitment to increase soya bean and energy imports from US, it would not be a favourable environment for the ringgit and probably affect its performance in the week after next.
“Given the economic recession that is gripping the US economy, it is still unlikely that the US would quash the trade deal. So that is less negative for currencies like the ringgit. Overall, we should see a reversal of the current safe haven demand for the US dollar, which will also help spur the ringgit,” Innes told Bernama.
Meanwhile, Bank Negara Malaysia is scheduled to announced the Q2 2020 GDP performance on August 14.
Market players are anticipating weak numbers given the Covid-19 pandemic that has caused the economy to partially shut down during the period, but believe the results would still be better compared to other countries as Malaysia eased its movement restrictions earlier as the number of new cases flattened.
The ringgit ended sharply higher against the greenback at 4.1830/1900 yesterday from 4.2380/2420 on Thursday last week. (The market was closed on Friday last week.)
The local note was traded broadly higher against other major currencies.
It rose against the Singapore dollar to 3.0499/0562 from 3.0806/0849 a week earlier and increased versus the Japanese yen to 3.9589/9667 from 4.0350/0400.
The local currency also appreciated against the British pound to 5.4755/4864 from 5.5102/5176 previously and vis-a-vis the euro to 4.9426/9517 from 4.9826/9882. — Bernama