The ringgit is anticipated to trade around the 4.72 to 4.73 range next week, with a limited downside as the local note is technically in an oversold position, said an analyst.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said investors are focused on the incoming US data, especially the US nonfarm payroll (NFP) in January.
The NFP is expected to drop to 162,000 versus last December’s 216,000.
More importantly, he said the Federal Open Market Committee (FOMC) meeting is scheduled to be on Jan 30 to 31 with most economists expecting the Federal Reserve (Fed) to maintain its status quo.
“Judging from the interest rate futures, the first interest rate cut in March has diminished from 73.6% on Jan 11, 2024, to 50.4% presently, which could provide support to the US dollar,” Mohd Afzanizam told Bernama.
SPI Asset Management managing director Stephen Innes added that the post-FOMC press conference on Jan 31 could impact market expectations regarding a first quarter interest rate cut.
“Despite potential fluctuations, unless there is a significant escalation in US-China geopolitical tensions, the ringgit will unlikely depreciate substantially from current levels, especially with multiple US rate cuts already factored in for 2024.
“However, as we approach the release of the US January jobs and consumer price index (CPI) reports in early February, market volatility may persist, and significant upward movement in the ringgit is improbable until these high-risk events pass,” said Innes.
For the week just ended, the local note was traded mixed on the sentiment of global economic prospects, including China and the US, and the uncertain US interest rate cut.
On Wednesday (Jan 24), Bank Negara Malaysia’s Monetary Policy Committee (MPC) kept the overnight policy rate at 3% during its first meeting of the year, marking the fourth consecutive meeting that the MPC opted to hold the key rate.
On a Friday-to-Friday basis, the ringgit was traded lower against the US dollar at 4.7275/7325 from 4.7160/7210 a week earlier.
The local unit was also traded easier against other major currencies.
It slid vis-a-vis the Japanese yen to 3.1988/2024 from 3.1871/1907 a week earlier, eased against the British pound to 6.0120/0183 from 5.9822/9886 and depreciated versus the euro to 5.1279/1333 from 5.1324/1379.
The ringgit was traded mostly higher against a few Asean currencies.
It weakened versus the Singapore dollar to 3.5267/5307 from 3.5176/5216 a week ago but improved against the Thai baht to 13.2679/2879 from 13.2733/2941 previously.
The ringgit rose against the Indonesian rupiah to 298.7/299.1 from 301.9/302.4 on Friday last week and ticked up against the Philippine peso to 8.39/8.41 from last week’s closing rate of 8.43/8.44.
