KUALA LUMPUR, May 15 — The ringgit is expected to weaken against the US dollar next week at between 4.10 and 4.15, in line with the fear of the United States (US) inflation and Consumer Price Index (CPI) data released on Wednesday.
OANDA senior market analyst for Asia Pacific, Jeffrey Halley said that with markets on the edge over inflation, a high print by US CPI could spur a jump in US bond yields and lift the greenback in coming days.
“In such a scenario, the ringgit is likely to trade lower over the course of the next week although holidays will mute trading volumes,” he told Bernama.
He said a lower US CPI print would alleviate inflation, risk and dollar pressures but could potentially expect a vigorous opposite move if it does not.
Meanwhile, SPI Asset Management global managing partner Stephen Innes opined that the US dollar would not strengthen too much on the broader landscape with the Federal Reserve anchoring short-term interest and ultimately it could limit the ringgit sell-off.
“However, until we see a healthy positive bend on the local epidemic curve, investors will continue to shy away from the local unit,” he said.
Nevertheless, he said the ringgit could trade on a more favourable target especially with palm oil and commodity prices trading firm if the movement control order proves effective.
He expected the ringgit to hover between 4.11 and 4.14 next week.
According to Bank Negara Malaysia (BNM), the ringgit is expected to remain exposed to periods of heightened volatility as uncertainties remain on the momentum of the global and domestic economic recovery.
The local note depreciated by 3.5 per cent against the US dollar in the first quarter of 2021, mainly due to the strengthening of the greenback, which also resulted in a broad-based weakening of other advanced and emerging market currencies.
On a weekly basis, the ringgit weakened versus the US dollar to 4.1230/1280 from 4.1100/1140 a week earlier.
The local note was also lower against other major currencies.
It fell against the Singapore dollar to 3.1023/1073 from 3.0870/0916 a week earlier and depreciated against the Japanese yen to 3.7909/7966 from 3.7662/7702.
The ringgit slipped vis-a-vis the British pound to 5.8279/8353 from 5.7203/7267 on Friday last week and decreased against the euro to 5.0028/0102 from 4.9632/9697. — Bernama