Ringgit to Trade Cautiously Ahead of FOMC Minutes
Uncertainty Surrounds Monetary Policy
The ringgit is expected to trade cautiously against the US dollar next week ahead of the release of the Federal Open Market Committee (FOMC) meeting minutes on February 20.
Assessing the Fed’s Stance
Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid said traders and market participants would assess the US Federal Reserve’s (Fed) stance on easing monetary policy this year.
“We opined that the Fed is not in a hurry to reduce the Fed Fund Rate (FFR) in the near future,” he said. “This is because the prevailing FFR is still restrictive, and the Fed would like to see the inflation trajectory steer towards its two per cent target, especially after US inflation data came in higher than expected.”
Inflation Data
US headline inflation and the core consumer price index rose 3.0 per cent and 3.3 per cent, respectively, in January.
Implications for the Ringgit
Mohd Afzanizam said the local note could test the immediate support level of RM4.43 next week.
Market Performance
For the week just ended, the ringgit fluctuated between gains and losses on concerns over policy uncertainties under US President Donald Trump.
However, it rebounded from oversold levels and ended the week higher, supported by Malaysia’s strong 2024 gross domestic product performance.
On a Friday-to-Friday basis, the ringgit appreciated to 4.4310/4385 from 4.4375/4420 the previous week.
Currency Performance
The local currency was mostly lower against major currencies.
It weakened against the British pound to 5.5769/5863 from 5.5278/5334 and slipped against the euro to 4.6437/6515 from 4.6101/6148. However, it strengthened against the Japanese yen to 2.9048/9099 from 2.9217/9249.
ASEAN Currencies
The ringgit also fell against most ASEAN currencies.
It declined against the Indonesian rupiah to 272.6/273.2 from 272.4/272.9 and weakened against the Singapore dollar to 3.3055/3113 from 3.2866/2901. It also edged down against the Philippine peso to 7.66/7.68 from 7.65/7.66.
However, the local note rose against the Thai baht to 13.1761/2059 from 13.1853/2041.
Conclusion
The ringgit is expected to trade cautiously ahead of the release of the FOMC meeting minutes, as market participants assess the Fed’s stance on easing monetary policy. The local currency’s performance will be influenced by the release of the minutes, which may impact the trajectory of the ringgit against the US dollar.
FAQs
- What is the expected performance of the ringgit ahead of the FOMC meeting minutes?
- What is the reason for the expected cautious trading?
- What is the current inflation rate in the US?
- How did the ringgit perform last week?
The ringgit is expected to trade cautiously against the US dollar.
Market participants will be assessing the US Federal Reserve’s stance on easing monetary policy this year.
US headline inflation and the core consumer price index rose 3.0 per cent and 3.3 per cent, respectively, in January.
The ringgit fluctuated between gains and losses on concerns over policy uncertainties, but rebounded from oversold levels and ended the week higher.