The ringgit has depreciated at its fastest pace in 23 weeks against the USD due to rising safe-haven demand amid hawkish Fed’s sentiment and global market uncertainties. On top of that, the UK’s sterling crisis and a looming recession in Europe have boosted demand for USD, further pressuring emerging currencies, including the ringgit.
Despite a slight week-on-week gain in the yuan due to the People’s Bank of China’s actions, the local note still closed the week above the 4.60 level against the strengthening dollar. The continued hawkishness of the Fed (another round of Fed members’ comments), coupled with the US red-hot labour market, may spark another cycle of risk asset selling off and USD’s haven rallying. The ringgit may continue to trade above the 4.60 threshold level against the greenback as the USD index is expected to trade above the 112.0 level.
Nevertheless, PBoC’s yuan interventions and the tabling of budget 2023 may help to limit the ringgit’s downside.
