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Ringgit To Extend Recovery Against US Dollar Next Week

KUALA LUMPUR – The ringgit is likely to extend its recovery against the US
dollar next week, as market sentiment has shifted more towards emerging market
currencies, dealers said.

Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr
Nazri Khan Adam Khan said the ringgit was expected to strengthen in the medium
term after the US dollar retreated.

“Ringgit should test the RM4.30/US Dollar threshold on slower expectations
of further US Federal Reserve rate hike in June, while Bank Negara Malaysia is
likely to step in at any further weakness, especially if ringgit trend towards
the RM4.50/US dollar psychological barrier.

“Bank Negara has so far shown commitment to defending the ringgit against
exchange rate volatility via open market operations,” he told Bernama.

Nazri said that the local currency should also get support from stable oil
prices with Brent crude settling at US$51.74 a barrel, while metal prices
strengthened as the dollar dipped, with gold edged up one per cent at US$1,226
an ounce and copper rose 0.7 per cent to US$5,908 a tonne.

The ringgit has begun its recovery phase this week, benefiting from the
uncertainty over the US interest rate outlook for this year.

Despite having decided to increase the interest rate by 25 basis-point after
the two-day Fed meeting on Wednesday, the Fed failed to give a hawkish message
on its projections of three rate increases in 2017.

Most investors have indicated that there would be no pick-up in the pace of
the US monetary tightening this year.

For the week just ended, the ringgit moved between 4.4480 and 4.4340 against
the US dollar. On a Friday-to-Friday basis, the ringgit traded higher at
4.4340/4370 against the greenback from 4.4490/4540.

Against other major currencies, the local note finished mostly higher.

The ringgit depreciated versus the Singapore dollar to 3.1638/1682 from
3.1384/1424 last week and weakened against the yen to 3.9156/9196 from
3.8566/8620.

Against the British pound, it slipped to 5.4933/4983 from 5.4167/4241, but
declined against the euro at 4.7767/7818 from 4.7217/7275.
— BERNAMA