After hovering around the 4.55-4.57 zone, the ringgit closed last week near the 4.58 level against the USD, mainly due to the Fed’s back-to-back 75 basis points hike and hawkish set of economic projections. To note, the USD index (DXY) soared above the 113.0 level, its highest since May 2002, while the 10-year US Treasury yield surged to as high as 3.7%. The ringgit was also dragged by a rapid depreciation of the yuan (-2.0% WoW) due to rising capital outflow from China.
Kenanga expects the ringgit to weaken further and trade around the 4.57-4.59 level against the USD as the DXY may continue to remain elevated around the 113.0 level due to potential hawkish remarks by a slew of Fed speakers throughout the week. However, a more hawkish tone by ECB’s Lagarde and another strong yuan fixing by the People’s Bank of China may help to limit the ringgit’s losses.
