KUALA LUMPUR, Oct 22 — The ringgit is expected to decline further against the US dollar next week, possibly in the 4.75 range, analysts said.

SPI Asset Management managing director Stephen Innes reckons that the US Federal Open Market Committee (FOMC) could lose its patience as inflation is not falling fast enough in the United States, which would mean more aggressive hikes and a strong US dollar.

"There seems to be a consensus that inflation remains stubborn and unacceptably high, hence the market also thinks further rate hikes are required.

"Liquidity is dropping quickly, and this could hurt risky assets like the ringgit, and I would not be surprised if we test 4.75 next week, especially if the delayed China GDP and trade data come out worse than expected,” said Innes.

Patrick Chang, Principal Asset Management Bhd’s Southeast Asia chief investment officer for Malaysia, said the economic outlook for Malaysia remains challenging as investors have factored in a potential economic downturn.

"This, and concerns about the interest rate hikes in the United States, coupled with slower growth in China, have led to heightened concerns over the economic outlook.

"The volatility is here to stay for now,” he told Bernama.

Another market analyst said with the US Federal Reserve (Fed) expected to continue its hawkish stance to rein in high inflation in the United States, Bank Negara Malaysia (BNM) would be expected to follow suit to support the ringgit.

"Without the overnight policy rate (OPR) increase, the ringgit will slip further as there is no anchor to support the local note against the greenback.

"Investors will continue to flee at a faster rate as the returns for investment are better for the US dollar compared to the ringgit,” she said, adding that the political uncertainty in Malaysia has also weighed on the local currency.

"We foresee that the ringgit will regain its footing post-election as new policies are announced, and putting the years-long political tussle in the bin,” she said, referring to the upcoming general election. "This will reposition Malaysia as a stable nation, politically and policy-wise.”

On Friday, the ringgit fell against the US dollar to 4.7380/7395 compared with 4.7025/7065 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 3.3144/3157 from 3.3009/3042 at the end of last week and fell against the euro to 4.6139/6153 from 4.5741/5780.

The ringgit was higher versus the British pound to 5.2677/2694 against 5.2870/2915 and rose vis-a-vis the Japanese yen to 3.1384/1396 from 3.1836/1867 a week earlier. — Bernama