KUALA LUMPUR: The ringgit is expected to trade between 4.69 and 4.70 next week as markets focus on the US Federal Open Market Committee (FOMC) meeting on March 19-20.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said that prior to that, the Bank of Japan (BoJ) would also convene its monetary policy meeting on March 18-19.
He said markets would be closely monitoring the Japanese central bank’s decision whether it would end its negative interest rate policy (NIRP) and the yield curve control (YCC) as Japan’s biggest companies have agreed to raise wages by 5.28 per cent for 2024, which would exacerbate the inflation rate.
As for the US Federal Reserve (Fed), Mohd Afzanizam said the critical area to look at is the Fed Dot Plot, which is the survey among Fed members on the Fed Fund Rate.
Last December, the Fed staff has projected three rate cuts in 2024.
“A pushback in the degree of policy accommodation would bolster the value of US dollar.
“On that note, expect ringgit to trade around RM4.69 to RM4.70 next week,” he told Bernama.
Meanwhile, Kenanga Research said as the market braces for the upcoming FOMC meeting, the allure of the safe-haven US dollar may persist, particularly in light of the US economy's persistent resilience.
Unless clear indicators of an imminent downturn emerge, US dollar bears may remain in hibernation, particularly with expectations that the BoJ may defer any significant moves until April, rather than acting next week.
“However, potential support for the ringgit could materialise if China's key data releases and Malaysia's trade figures exceed expectations,” said the research firm.
It further said the ringgit-US dollar outlook is neutral next week, with the pair expected to hover around its five-day exponential moving average (EMA) of 4.695.
“Technically, the pair may trade in the range of 4.687 to 4.713. However, higher demand for US dollar may weaken the ringgit,” Kenanga Research said.
On a Friday-to-Friday basis, the ringgit weakened to 4.7050/7095 against the greenback compared with 4.6815/6855 a week earlier.
The local note however traded higher against most major currencies.
It improved vis-a-vis the Japanese yen to 3.1637/1669 from 3.1821/1850 a week earlier, higher against the British pound to 6.0003/0060 from 6.0050/0101 but was lower against the euro at 5.1275/1324 from 5.1188/1231 previously.
The ringgit traded mixed against ASEAN currencies.
It appreciated to 13.1480/1661 against the Thai baht from 13.2134/2321 last Friday, but fell versus the Singapore dollar to 3.5183/5219 from 3.5160/5192 a week ago.
The ringgit slid against the Indonesian rupiah to 301.5/302.0 from 300.2/300.6 last Friday, and dropped against the Philippines peso to 8.47/8.48 from 8.42/8.43 last week. -Bernama
