Ringgit expected to extend downward momentum next week

Ringgit expected to extend downward momentum next week
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KUALA LUMPUR (Nov 5): The ringgit is expected to come under pressure and weaken against the US dollar next week, mainly driven by external headwinds and domestic factors, said analysts.

SPI Asset Management managing director Stephen Innes said the ringgit may be heading to the 4.74-4.76 level, subject to the significant US dollar momentum with external factors to drive momentum where the emerging market currencies, in general, continued to be under pressure.

“Next week could see more weakness for the ringgit unless tonight’s US non-farm payroll comes out significantly below expectations.

“But more critically, foreign exchange traders are circling the Nov 10 US consumer price index as hope springs eternal that the US inflation may ease and the market then prices a lower US Federal Reserve (Fed) rate which should be favourable for the ringgit,” he told Bernama.

On the post-15th general election (GE15) impact on the ringgit, Innes said the local currency will react negatively as it tends to weaken after the elections partially due to economic circumstances in certain cases.

The Election Commission has announced that polling for GE15 would be held on Nov 19, while the nomination date falls on Nov 5, which allows for two weeks of campaigning.

On a weekly basis, the ringgit retreated on Friday (Nov 4) against the US dollar to 4.7460/7495 compared with 4.7225/7275 a week earlier.

Against a basket of major currencies, the local note traded mixed on a Friday-to-Friday basis. 

It depreciated against the Singapore dollar to 3.3517/3546 from 3.3436/3474 at the end of last week and dropped vis-a-vis the Japanese yen to 3.2111/2137 from 3.1976/2012 a week earlier.

The ringgit appreciated against the British pound to 5.3231/3270 from 5.4455/4513 and strengthened against the euro to 4.6383/6417 from 4.7008/7058.