The ringgit is expected to continue trading cautiously next week, as investors await a slew of economic data scheduled to be released by several major economies.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said next week, the focus would be on China’s fourth-quarter 2023 gross domestic product numbers which will be released on Wednesday, along with the UK and European Union’s consumer price index (CPI).
“Given the recent US CPI print which turned out to be higher than expected, markets would reassess their position on whether the rate cut could happen as early as March,” he told Bernama.
The year 2023 was not an easy one for businesses. With interest rate hikes up to 3% while inflation remained above its long-term average since the pandemic, businesses had to fight against currency fluctuation and gain a competitive advantage in the market to survive.
He said the ongoing military conflicts in the Red Sea and Yemen could result in higher crude oil prices which may have an impact on inflation.
“The ongoing conflicts occurring in the Red Sea have resulted in the decline in traffic by as much as 20% year-on-year as most vessels needed to reroute to the Cape of Good Hope in a bid to avoid the conflicting areas.
“Such endeavour would certainly be costly and time-consuming which essentially would exert pressure on the cost of doing business,” he said.
Ultimately, Mohd Afzanizam said it depends on the US Federal Reserve whether it is going to ease its monetary policy sooner or wants to take stock of the current developments on inflation.
“It’s a little of neither here nor there situation as the markets might be indecisive. On that note, we expect the USD/MYR pair to languish around 4.63 to 4.65 next week,” he added.
For the week just ended, the local note was traded higher as concerns over the US CPI data has caused some investors to turn to emerging currencies.
On a Friday-to-Friday basis, the ringgit was higher against the US dollar at 4.6455/6500 from 4.6525/6580 a week earlier.
The local unit also traded mostly lower against other major currencies.
It rose vis-a-vis the Japanese yen to 3.2007/2040 from 3.2038/2078 a week earlier but declined against the British pound to 5.9239/9297 from 5.8891/8961, and depreciated versus the euro to 5.0924/0973 from 5.0763/0823 at the previous Friday’s close.
The ringgit however was traded higher against a few Asean currencies.
It strengthened versus the Singapore dollar to 3.4900/4936 from 3.4944/4988 a week ago and advanced against the Thai baht to 13.2464/2664 from 13.4001/4236 previously.
The ringgit was higher against the Indonesian rupiah at 298.6/299.1 from 299.8/300.3 on Friday last week and appreciated against the Philippine peso to 8.30/8.32 from last week’s closing rate of 8.37/8.38.
