Despite a relatively weak USD index due to disappointing US housing data and the Bank of Japan’s surprise policy shift, the
ringgit depreciated against the USD, potentially due to elevated recessionary fears and a marginally weaker yuan. The ringgit was also pressured by the narrowing of MY-US yield premium. The local note may continue to hover around the 4.30 – 4.40 level as the market awaits US PCE readings.
For next week, research house Kenanga says the ringgit may continue to trade range-bound against the USD due to a lack of catalysts and looming global economic uncertainties. That being said, the local note may benefit from the USD year-end seasonal weakness. However, the worsening COVID-19 outbreak in China may cast doubts on China’s COVID-19 exit plan, potentially weakening the yuan and dragging the ringgit.
The USDMYR pair’s outlook continued to be neutral for the week ahead, with the pair likely to hover around 4.426 indicating that the pair is neither oversold nor overbought.
