KUALA LUMPUR (Jan 23): The ringgit is expected to strengthen between RM4.0375 and RM4.0575 next week from the RM4.0415 level on Friday amid rising concerns over macro and micro economic environment due to resurgence of Covid-19 cases.
Axi chief global market strategist Stephen Innes said the extended movement control order (MCO) could linger until the vaccine roll-out can make a reasonable difference, which likely happening towards March or April.
“I expect risk to be unsettled next week and the dollar would start attracting larger safe-haven flows, which could really dent bullish ringgit sentiment,” he said.
Meanwhile, FXTM market analyst Han Tan said the upcoming week ahead harbours major events that may alter global risk sentiment, from the ongoing US earnings season to top-tier economic data out of the US and China, as well as the next US Federal Reserve (Fed) rate decision.
“Should the Fed be able to further dampen the tapering talk in the markets, that could suppress US yields further and prompt the dollar to return to its weakening bias, while allowing for further gains in Asian currencies,” he said.
Locally, Malaysia’s December external trade performance is set to be unveiled next Friday, with the markets expecting exports to register a year-on-year growth for a fourth consecutive month, even though imports may post its steepest year-on-year contraction since May due to dampened domestic economic conditions.
“The ringgit and dollar performance moving forward is set to be largely dictated by the greenback’s near-term performance, as well as Malaysia’s health and economic responses to the ongoing MCO,” he said.
For the week just ended, the ringgit joined the Philippine peso, Indonesian rupiah and the South Korean won in registering a weekly decline against the US dollar.
The local note was traded between 4.0500/0540 and 4.0280/ 0320 against the greenback.
The MCO implemented in six states, namely Selangor, Penang, Melaka, Johor, Kelantan, and Sabah, as well as three federal territories, Kuala Lumpur, Putrajaya and Labuan, has been extended until Feb 4 to curb Covid-19.
On a Friday-to-Friday basis, the ringgit was slightly lower against the US dollar at 4.0415/0445 versus 4.0350/0380 in the previous week.
The local currency was traded easier against other major currencies.
It depreciated against the Singapore dollar to 3.0451/0485 from 3.0386/0418 a week earlier and weakened versus the euro to 4.9197/9246 from 4.8977/9021.
The ringgit fell against the yen to 3.8984/8021 from 3.8918/8962 and weakened vis-a-vis the pound to 5.5231/5288 from 5.5029/5086 previously.