Ringgit to Remain Defensive Next Week against Greenback

Analyst Expectations

The ringgit is expected to remain defensive within the 4.43-4.44 range against the US dollar next week, as cautious investor sentiment continues to strengthen demand for the greenback as a safe-haven currency, said an analyst. Dr. Mohd Afzanizam Abdul Rashid, Bank Muamalat Malaysia Bhd’s chief economist, noted that the next trend in the currency market will be predicated on the upcoming Federal Open Market Committee meeting on March 18-19.

Federal Open Market Committee Meeting

While economists are mostly pencilling in no change in the United States (US) Federal Funds Rate, the Federal Reserve’s staff quarterly forecast will be closely scrutinized by traders and investors. This is especially true when calls for a US recession have been widely shared by the major investment banks, Dr. Afzanizam added.

Central Banks’ Monetary Policy Meetings

Both the Bank of Japan and Sweden’s Sveriges Riksbank are set to hold their monetary policy meeting next week, with both central banks expected to maintain their policy rate steady at 0.50 per cent and 2.25 percent, respectively.

Ringgit’s Performance

Year-to-date, the ringgit gained 0.64 per cent against the US dollar but weakened against other major currencies. The local currency ended the week at 4.4410/4455 against the greenback, easing from 4.4110/4145 the previous week. The ringgit traded mostly lower against other major currencies, except for the Japanese yen, where it rose to 2.9809/9842 from 2.9909/9935 last week.

ASEAN Currencies

The local note also depreciated against ASEAN currencies. It eased versus the Singapore dollar to 3.3241/3277 from 3.3185/3214, edged lower against the Thai baht to 13.1820/2020 from 13.1124/1290, slipped vis-a-vis the Indonesian rupiah to 271.6/272.0 from 270.6/271.0, and ended marginally lower against the Philippine peso to 7.75/7.77 from 7.71/7.73, last week.

Conclusion

The ringgit is expected to remain defensive next week, with a range of 4.43-4.44 against the US dollar. Cautious investor sentiment and the upcoming Federal Open Market Committee meeting will likely influence the currency market, with a bearish bias.

FAQs

* What is the expected range of the ringgit against the US dollar next week?
The ringgit is expected to remain defensive within the 4.43-4.44 range against the US dollar next week.
* What will influence the currency market next week?
Cautious investor sentiment and the upcoming Federal Open Market Committee meeting will likely influence the currency market, with a bearish bias.
* How has the ringgit performed so far this year?
The ringgit gained 0.64 per cent against the US dollar but weakened against other major currencies.
* What is the expected performance of the ringgit against ASEAN currencies?
The ringgit depreciated against most ASEAN currencies, except for the Japanese yen, where it rose.