KUALA LUMPUR: The ringgit will likely stay within a narrow range of RM4.57 to RM4.60 against the US dollar this week due to the global market indicating a stronger greenback, says an analyst.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said financial markets seemed anxious about the global growth prospects when China reported a decline in its exports for three months in a row and negative consumer price index print last week.
Apart from that, he said signals from the United States Federal Reserve are still mixed with some officials favouring the interest rate to be higher for longer.
With that in mind, data points from China should continue to take centre stage this week, Mohd Afzanizam shared.
Data points on retail sales, industrial production and fixed asset investment will be the key focus to gauging the health of China’s economy, he noted.
“Currently, the support and resistance level for the US dollar/ringgit pair is located between RM4.5491 and RM4.6257.
“There is a chance that the ringgit could stage an appreciation given that the technical indicator is suggesting that the ringgit is already at an oversold position, and the US dollar/ringgit might continue to linger in a tight range as foreign exchange market participants have become risk averse, leading to higher demand for the US dollar,” he told Bernama.
Hong Leong Research, in a note, said that the US dollar was traded higher for a second straight week, advancing by 0.3% week-on-week after Malaysia’s industrial production for June contracted by more than expected, reinforcing expectations of a slowing economy.
Meanwhile, the ringgit was mixed against major currencies and Asian peers.
“The focus will be on the state elections and second-quarter gross domestic product release on August 18 domestically, where we expect growth to decrease by half from the 5.6% registered in the first quarter.
“The ringgit performance of US dollar/ringgit will also look to the US dollar against yuan and the general US dollar direction for leads,” it added.
On a Friday-to-Friday basis, the ringgit was lower against the US dollar at 4.5865/5895 from 4.5515/5565 a week earlier.
The local unit was also traded mostly lower against other major currencies.
It fell against the British pound to 5.8230/8268 from 5.7836/7899 the previous Friday, slipped versus the euro to 5.0351/0384 compared to 4.9816/9871 but appreciated vis-a-vis the Japanese yen to 3.1712/1735 from 3.1898/1935 previously.
