Last week, the local currency, shed all of its gains against the USD, mainly due to the lack of pro-ringgit catalysts and deteriorating global economic prospects. The USD index was trading around the 108.7-109.7 level due to the Fed’s Powell hawkish rhetoric and Europe’s worsening energy crisis. On top of the continuation of safe haven flows into the USD, the ringgit was dragged down by the persistent weakness in the yuan as China extended its lockdown in the city of Chengdu.
Despite solid US jobs report and market expectations of another 75 basis points (bps) interest rate hike by the Fed, research house Kenanga feels the local note is expected to trade stronger around the 4.47-4.48 level against the USD. The ringgit is seen to benefit from the Bank Negara Malaysia’s potential 25 bps overnight policy rate hike and European Central Bank’s widely anticipated 75 bps interest rate hike. However, a potential slowdown in China’s exports may weigh on the yuan, exerting downward pressure on the ringgit.
The ringgit rebounded from Monday’s loss to open slightly higher against the US dollar on Tuesday amid mixed sentiments, as traders remained cautious ahead of Bank Negara Malaysia’s (BNM) upcoming two-day monetary policy committee (MPC) meeting from Wednesday, an analyst said.
At 9.01 am today, the local currency had advanced to 4.4860/4895 against the greenback, from Monday’s close at 4.4900/4940. (full report)
