Ringgit's performance likely to be encouraging next week

KUALA LUMPUR: The ringgit's performance is likely to be encouraging with an upside bias against the US dollar next week as Bank Negara Malaysia reaffirms the local note's steadiness, said RHB Research.
In a note today, RHB Research said, the central bank has indicated that the ringgit has stabilised following its implementation of foreign exchange measures, including the requirement for exporters to convert 75% of their export proceeds into ringgit.
"They acknowledged the US$17 billion (US$1 = RM4.28) short position in currency swap with local banks, but it is more for liquidity management.
"This position is expected to be eased gradually, on the back of export proceeds conversion and potential inflow of foreign capital going forward," it said.
RHB Research said given that major central banks were increasingly vocal about tightening their monetary policies, the BNM may still need to use the swap position to continue managing the liquidity in the system.
"In this respect, we envisage the ringgit to trade in a range of RM4.20-4.40 against the US dollar for the next few months, before settling down at RM4.20 by year-end," it said.
On a Friday-to-Friday basis, the ringgit was traded higher at 4.2820/2850 against the greenback from 4.2910/2940 last week.
However, the local note was traded mostly lower against other major currencies, except the greenback.
It declined versus the Singapore dollar to 3.1375/1410 from 3.1210/1243 last week and weakened against the yen to 3.8362/8406 from 3.7886/7926 last Friday.
The local note fell against the British pound to 5.5692/5744 from 5.5624/5667 last week and depreciated against the euro to 4.9868/9916 from 4.8977/9016 previously. — Bernama