Ringgit Forecast to Trade in Narrow Band Near RM4.06-RM4.08 Next Week

KUALA LUMPUR: The ringgit is expected to trade within a narrow range against the US dollar next week as investors remain cautious ahead of key monetary policy decisions by the United States Federal Reserve and the Bank of Japan.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said attention will focus on the Federal Open Market Committee and BOJ monetary policy meetings. Both central banks are expected to raise their policy rates by 25 basis points.

Market participants will closely monitor the Fed’s latest economic projections, including gross domestic product growth, inflation, unemployment and the federal funds rate.

“Expectations of a US Fed rate hike have shaped sentiment in the foreign exchange market and provided support for the US dollar,” he said.

Against this backdrop, Mohd Afzanizam said the ringgit is likely to trade within a tight range of RM4.06 to RM4.08 against the US dollar next week.

External developments, particularly the sharp rise in crude oil prices amid the intensifying US-Israel-Iran conflict, are also expected to influence market sentiment.

“The escalation has pushed Brent crude oil prices up to around US$104.64 per barrel,” he said.

On a Friday-to-Friday basis, the ringgit weakened against the US dollar to 4.0685/0725 from 4.0425/0465 a week earlier.

The local currency also traded lower against a basket of major currencies during the week.

It depreciated against the British pound to 5.4961/5015 from 5.4663/4717, the Japanese yen to 2.6400/6428 from 2.5832/5860, and the euro to 4.7178/7225 from 4.6962/7008.

The ringgit also declined against several ASEAN currencies.

Against the Singapore dollar, it traded at 3.2091/2125 from 3.1888/1923, while it weakened against the Thai baht to 12.3072/3241 from 12.2693/2863.

It also fell against the Indonesian rupiah to 231.0/231.3 from 229.1/229.4 and the Philippine peso to 6.49/6.50 from 6.45/6.46.

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