The ringgit is seen to trade range-bound between 4.22-4.23 with a downside bias against the dollar this week, Kenanga Research said in its weekly ringgit report.
It said that the upside to the ringgit appears to be limited this week as the direction of the local note will be heavily influenced by the December FOMC meeting.
“Emerging market currencies’ sell-off may likely resume if there is a more hawkish tilt from the Fed’s Summary of Economic Projections and renewed Omicron concerns. Thus, Malaysia Ringgit is seen to trade range-bound between 4.22-4.23 with a downside bias against the dollar,” Kenanga said.
Kenanga said that the ringgit managed to appreciate against the dollar last week, despite China’s property debt crisis and PBOC’s decision to cut the reserve requirement ratio.
It said that the local note was mainly supported by rising crude oil prices and falling dollar index (DXY) amid risk- on market sentiment as the Omicron fears subsided. In addition, better-than-expected Malaysia IPI and retail sales readings has helped to push the ringgit higher.
On its technical analysis, Kenanga said that the dollar may see some upward momentum this week and breach the 4.226 level if investors’ sentiment turns bearish.
Conversely, Kenanga said that a break below the 4.206 support level is needed to confirm ringgit’s extended bullish bias.