Ringgit seen to trade on downward bias next week

On a weekly basis, the ringgit declined versus the US dollar to 4.1380/1410 from 4.1070/1100 a week earlier. — AFP pic
On a weekly basis, the ringgit declined versus the US dollar to 4.1380/1410 from 4.1070/1100 a week earlier. — AFP pic

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KUALA LUMPUR, June 19 — The ringgit is likely to trade on a downward bias against the US dollar next week mainly influenced by external factors.

ActivTrades trader Dyogenes Rodrigues Diniz said given the expectations on the United States (US) monetary policy, the most likely scenario would be that the ringgit will continue to be pressured to hit 4.1750 as a first target and 4.2200 as the final projection, over the next two to four months.

Although no changes were made to interest rates, policymakers are beginning to change their minds about US inflation, financial stimulus and interest rates.

“Out of the 18 voting members, seven think that the US Federal Reserve (Fed) must start hitting the brakes when it comes to the continuation of economic stimulus.

“Although nothing has materially changed, the market is already pricing-in these expectations, adding fuel to the US dollar’s strength,” he told Bernama.

On a similar note, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said despite positive sentiment in terms of Malaysia’s vaccination progress, the external factors mainly on the possibility of an earlier-than-expected rate increase by the Fed would continue to drag emerging currencies, including the ringgit, lower.

“Amid improving economic landscape in the US, the dollar is expected to strengthen further. With this in mind, the ringgit will likely trade between 4.13 and 4.15 to the dollar next week,” he said.

Meanwhile, OANDA’s Asia Pacific senior market analyst Jeffrey Halley said the ringgit could receive some boost from oil as it is expected to recover next week.

Besides, there were news that Brent crude could surge above US$80 per barrel as pent-up demand unleased by the easing of the pandemic stokes global consumption. It said global oil demand may hit a record high in August.

“I expect the ringgit-US dollar to test 4.15 early next week before rallying to 4.16 and possibly testing 4.18 if the dollar rally continues to gain strength,” said Halley.

On a weekly basis, the ringgit declined versus the US dollar to 4.1380/1410 from 4.1070/1100 a week earlier.

The ringgit was however traded mostly firmer against other major currencies.

Against the Singapore dollar, the local unit improved to 3.0851/0875 from 3.1034/1059 a week earlier, but versus the yen, it dipped to 3.7570/7598 from 3.7500/7531 previously.

The local note rose against the British pound to 5.7526/7568 from 5.8094/8140, and against the euro, it appreciated to 4.9308/9344 from 4.9908/9945 in the preceding week. — Bernama


 

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