KUALA LUMPUR, Oct 24 — The ringgit is projected to trade within a tight range next week with a bias towards on the weaker side as the US dollar is likely to strengthen further.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the greenback had gained strength following the heightened uncertainty over the US fiscal stimulus bill, which was likely to be passed only after the presidential election on Nov 3; and perhaps the process might drag until early next year.
Concurrently, the US Dollar Index has risen from as low as 92.611 as of Oct 21 to around 93.031 currently.
Domestically, he said, the political landscape was also “quite colourful” with talks of possible cabinet reshuffle and a potential declaration of a state of emergency ahead of Budget 2021 announcement.
“Therefore, the ringgit should linger between RM4.14 and RM4.15 next week,” he told Bernama.
FXTM market analyst Han Tan said should investors continue to stay true to expectations that the next US fiscal stimulus package could be agreed to in the remaining days before the elections, it could exert more downward pressure on the greenback.
“However, should risk aversion pick up steam leading up to Nov 3, that might see the greenback unwind its recent losses,” he said.
In addition, the market will also be closely monitoring major economic releases out of some of the world’s largest economies over the coming days, such as the third-quarter Gross Domestic Product figures for the United States and European Union, as well as China’s September industrial profits, which may colour some of the market decisions.
Locally, Malaysia’s September exports data, to be released soon, was set to show a year-on-year (y-o-y) gain of 3.8 per cent, which would mark a return to expansion after the 2.91 per cent y-o-y contraction in August, Tan said.
On a Friday-to-Friday basis, the ringgit eased against the US dollar to 4.1500/1600 from 4.1470/1520 in the previous week.
The ringgit depreciated against the Singapore dollar to 3.0593/0678 from 3.0517/0556 on Friday last week and fell versus the yen to 3.9664/9771 from 3.9409/9460.
The local unit weakened vis-a-vis the British pound to 5.4286/4434 from 5.3654/3735 a week earlier and traded lower against the euro at 4.9153/9288 from 4.8553/8628 previously. — Bernama
