KUALA LUMPUR: The ringgit is expected to trade between 4.15 and 4.18 against the US dollar following guidance from the fluctuations in the greenback along with the Federal Reserve’s (Fed) decision on US interest rates, said an analyst.
FXTM market analyst Han Tan said the Fed’s upcoming policy decision is set to be a key driver of global markets in the week ahead, as markets expect at least one US interest rate cut to be a near-certainty this year.
“Although the Fed isn’t expected to make any monetary policy moves this month, any hints of an eventual lowering of interest rates could see the US dollar weaken, while allowing Asian currencies to climb higher.
“The US dollar has been rather subdued with markets pricing in an interest rate cut over the coming months,” he told Bernama.
He said so far this month, regional assets have mostly benefited from the relative pause in the escalating tensions between the US and China, although market sentiment remains fragile and could quickly give way on further signs of heightened tensions between the world’s two largest economies.
Tan, however, said the Fed’s US economic forecasts in the week ahead could also influence risk sentiment, whereby heightened downside risks for the world’s largest economy could fuel concerns over the broader global slowdown and prompt Asian assets to unwind recent gains.
Meanwhile, throughout this week, the ringgit mostly traded within the range of 4.16 to 4.17, anchored by Malaysia’s better-than-expected April industrial production figures as well as growing expectations of a US interest rate cut, Tan said.
On a Friday-to-Friday basis, the ringgit weakened to 4.1650/1690 against the US dollar from 4.1570/1620 previously.
It traded mostly lower against other major currencies.
The local unit depreciated against the Singapore dollar to 3.0457/0491 from 3.0396/0444 at last Friday’s close, declined to 3.8490/8534 from 3.8275/8331 versus the yen, and fell versus the euro to 4.6940/6989 from 4.6787/6860 previously.
However, vis-a-vis the pound it appreciated to 5.2691/2759 from 5.2844/2924. - Bernama