Ringgit likely to trade moderately firmer against greenback next week

KUALA LUMPUR, May 28 — The ringgit is expected to trade fairly positive against the US dollar next week as the foreign exchange market is anticipated to experience some correction, said an analyst.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said talks of a possible recession may cause the United States Federal Reserve (Fed) to revisit the monetary tightening strategy especially in the face of disruption of supply chains.

“Furthermore, survey data such as the Purchasing Managers Index (PMI) across the globe appears to be taking a breather in April, implying that the strength of economic recovery might hit a speed bump,” he told Bernama.

Hence, Mohd Afzanizam said a possible pause in the interest rate hike by the Fed would lend support to the ringgit in the immediate term.

Meanwhile, SPI Asset Management managing partner Stephen Innes said the local note could likely move between 4.3675 and 4.3875 next week with a bullish bias.

“If the recent strength in global markets continue and oil prices remain at lofty levels, the ringgit against the US dollar could test the 4.37 level next week,” he said.

Furthermore, he added another oil-induced rally is expected next week after the European Union summit discusses a complete embargo on Russian energy follows-through with a total Russian oil and gas ban.

For the week just-ended, the ringgit’s movement against the US dollar was bumpy, influenced by the Chinese yuan, fragile sentiment due to the global interest rate environment, uncertain global economic outlook as well as the higher oil prices.

On a weekly basis, the ringgit was firmer against the greenback at 4.3775/3800 on Friday compared to 4.3870/3910 a week earlier.

The local note traded lower against a basket of major currencies on a Friday-to-Friday basis.

The ringgit inched down against the Singapore dollar to 3.1962/1982 from 3.1845/1879 a week earlier and weakened versus the British pound to 5.5170/5201 from 5.4732/4782 last week.

It depreciated against the euro to 4.6905/6932 from 4.6445/6488 and fell vis-a-vis the Japanese yen to 3.4450/4472 from 3.4236/4270 previously. — Bernama