Rising Uncertainty Likely To Cause Ringgit To Trade Sideways This Week

The ringgit is expected to trade sideways against the greenback due to rising market uncertainty amid a potential Russian invasion of Ukraine, Kenanga Research said in a note

It said that due to the lack of pro-ringgit catalysts, the direction of the local note will also be influenced by the FOMC minutes sentiment, in which more hawkish rhetoric may push the DXY higher and weaken the MYR around the 4.19-4.20 level. However, higher crude oil prices will continue to buoy the ringgit.

Reviewing last week’s performance, Kenanga said that ringgit trade was mostly flat against the USD last week before weakening to around the 4.19 level on Friday due to a 7.5% spike in the US inflation rate.

The research house said that despite higher Brent crude oil price (7- year high) and stronger-than-consensus 4Q21 Malaysia GDP growth, the ringgit shed 0.22% WoW as the USD index (DXY) climbed above the 96.0 level amid a higher probability of a 50-basis points rate hike by the Fed in March.

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