For the first time in nine weeks, the ringgit appreciated on a week-on-week basis against the US Dollar, mainly due to a fall in the dollar’s index (DXY) amid weak US consumer confidence reading and softer house prices.
The DXY was also dragged lower by a rebound in the Pound due to the appointment of Rishi Sunak as UK’s prime minister. Nevertheless, research house Kenanga notes that the local note continued to be pressured by the yuan’s weakness and US better-than-expected 3Q22 GDP.
Despite expectations of the Bank of England’s 75 basis points rate hike, the continuation of the Fed’s super-sized interest rate hike and the Bank of Japan’s ultra-loose monetary policy may boost the DXY to recover around the 112.0 level, weakening the ringgit. To add, the DXY may also trend higher if euro zone macro figures turn out to be worse than expected and if the yuan weakened above the 7.30/USD threshold.
However, the local note is expected to stay supported around the 4.73 – 4.75 level, backed by Bank Negara Malaysia’s expected 25 bps overnight policy rate hike at its Monetary Policy Committee meeting on 2-3 November.
