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KUALA LUMPUR – The ringgit is likely to trade with an upward bias next week against the US dollar as the greenback is retreating in global markets, said an economist.
Juwai IQI global chief economist Shan Saeed said Bank Negara Malaysia (BNM) has played its cards smartly despite pressure from global financial markets.
“The US Federal Reserve (Fed) is making tactical manoeuvring to bring the value (of the US dollar) down in order to support the US economy. A 50 to 75 basis points hike is expected at the September 20-21 Fed meeting.
“A stronger US dollar is bad for the global economy. A stronger greenback makes imports cheaper for the US economy,” he said.
The ringgit is expected to trade within the 4.4000-4.4900 range against the US dollar next week.
“The ringgit is going to make a turnaround soon. The year-end forecast stance remains unchanged, from 4.0500 to 4.3500 against the US dollar. The Malaysian economy will grow between 6.5% and 7% in the current fiscal year,” he added.
On Thursday, BNM increased the overnight policy rate (OPR) by 25 basis points to 2.50% at its fifth monetary policy committee (MPC) meeting to reduce inflationary pressures.
For the week just ended, the ringgit was traded mostly lower against the US dollar as traders remained cautious ahead of BNM’s MPC meeting, deepening global economic uncertainty, and rising US treasury yields.
On September 7, the ringgit opened at its lowest level versus the US dollar since the Asian financial crisis back in 1998, as more investors shifted to safe havens due to the uncertain global economic outlook.
The ringgit hit 4.5010/5035 during the morning trade on Wednesday.
Yesterday, the ringgit weakened against the greenback to 4.4965/4990 compared with 4.4855/4870 a week earlier.
The local note also traded mostly lower against a basket of major currencies.
It decreased against the British pound to 5.2249/2278 from 5.1888/1906, depreciated against the Singapore dollar at 3.2189/2209 from 3.1996/2009, and eased versus the euro to 4.5361/5386 from 4.4873/4888 this week.
However, the local unit surged against the Japanese yen to 3.1670/1690 from 3.1950/1963 a week earlier.
Bursa Malaysia is likely to trend higher next week, with the FTSE Bursa Malaysia KLCI (FBM KLCI) expected to break the 1,500-mark due to the optimism that there will not be a global recession.
Inter-Pacific Asset Management Sdn Bhd executive director and fund manager Datuk Nazri Khan Adam Khan said the fear among market players is seen to be declining despite the hawkish rhetoric move by the Federal Reserve and the European Central Bank in raising the interest rate by 0.75 basis-point.
“We also saw the technology sector taking the lead in the stock market and investors believe the interest rate will not increase aggressively,” he said.
At the same time, he said they expect the central bank to focus more on economic growth than inflation.
On the home front, he remained confident that investors would be making a comeback due to the strong domestic and foreign investment demand as well as healthy development in trade and tourism.
Hence, he reckoned the FBM KLCI to trend within the 1,500 to 1,530 range for next week.
On a Friday-to-Friday basis, the FBM KLCI increased 5.35 points to 1,496.53 from 1,491.18 at the end of the previous week, tracking improved sentiments among the regional peers.
As for the index board, the FBM Emas Index improved 72.69 points to 10,628.22, FBMT 100 Index went up 65.68 points to 10,375.45, FBM Emas Shariah Index bagged 93.85 points to 10,693.48, FBM 70 surged 195.67 points to 12,756.82, and FBM ACE inched up 51.80 points to 4,858.48.
Sector-wise, the energy index rose 10.09 points to 707.16, the plantation index gained 36.13 points to 6,993.97, the industrial products and services index lifted by 5.38 points to 185.60, and the financial services index added 53.17 of a point to 16,817.18.
Weekly turnover widened to 11.39 billion worth RM7.86 billion from 9.43 billion worth RM7.9 billion in the previous week.
The main market volume was higher at 7.01 billion units worth RM6.29 billion from 5.58 billion shares valued at RM6.65 billion in the previous week.
Warrants volume grew to 1.28 billion units worth RM205.47 million from 1.21 billion units worth RM196.70 million last week.
The ACE Market volume firmed to 3.07 billion shares valued at RM1.36 billion from 2.64 billion shares valued at RM1.05 billion the week before. – Bernama, September 10, 2022