Ringgit to extend downtrend against greenback to next week

KUALA LUMPUR: The ringgit is likely to extend its downtrend against the US dollar to next week, amid stronger US economic growth and expectations of gradual interest rates hike by the Federal Reserve, said analysts.
FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said another jump in demand for the US dollar had left a lasting impact on financial markets, with a number of different currencies across the globe, including the ringgit, being hammered by a stronger greenback.
He noted that the ringgit had suffered as a result of the US dollar drive and slipped below the psychological 4.05-level.
"We should pay close attention to the US' second-quarter gross domestic product figures scheduled for release on July 27. Signs of solid economic growth could further boost investor sentiment for the US dollar," he told Bernama.
The US dollar hit a one year-high against a basket of currencies on Thursday on the back of the country's steady economic growth path and potential further interest rate hikes for the remaining year.
However, the greenback retreated on Friday after President Donald Trump expressed concerns over a stronger currency.
Jameel said with the ringgit having slipped below 4.05 against the US dollar, it was becoming very much possible, that it could decline to as much as 4.10 over the coming weeks.
"This is, however, a result of the stronger US dollar and the consequent pain that this is causing emerging markets.
"The only factor to really benefit the ringgit at present is if the US dollar suffered from a significant round of profit-taking. For as long as the US dollar remains in demand from investors, it just points towards further weakness for emerging market currencies as a whole," he added.
On a Friday-to-Friday basis, the local note finished lower against the greenback at 4.0600/0630 from 4.0500/0530.
The ringgit was mostly lower against a basket of major currencies.
It rose against the pound to 5.2861/2904 from 5.3189/3236, but fell against the euro to 4.7315/7366 from 4.7122/7161.
The ringgit depreciated against the Singapore dollar to 2.9687/9718 from last Friday's 2.9620/9651 and eased against the yen at 3.6108/6138 from 3.6006/6043. — Bernama