KUALA LUMPUR (April 20): The ringgit is likely to trade in the same range of around 4.78 against the US dollar next week, as the situation in the Middle East will continue to be under scrutiny by investors, said an analyst.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said any form of escalation in tension would result in a higher demand for the US dollar.

“On that note, the ringgit should stay within the prevailing level next week,” he told Bernama.

At the same time, he said markets will be watching for the Federal Reserve's favourite inflation gauge, the personal consumption expenditures (PCE) price index.

“It seems that the interest cut thesis is losing its appeal as inflation is expected to stay elevated in line with a steady labour market condition,” he noted.

Meanwhile, Kenanga Research said stable growth prospects and authorities' continued support might help keep the ringgit stable.

Technically, it said the USD/MYR was expected to turn neutral-to-bearish next week, with the pair expected to trade near its five-day exponential moving average of 4.78.

“The local note could strengthen against the US dollar if risk sentiment improves, with immediate support at 4.781,” it said.

On April 15, Bank Negara Malaysia said the central bank stood ready to deploy the tools at its disposal to ensure that the Malaysian financial markets remain orderly and continue to function efficiently in light of the current geopolitical situation.

On a Friday-to-Friday basis, the ringgit depreciated to 4.7810/7855 versus the greenback compared with 4.7680/7730 a week earlier.

The local note traded mostly higher against most other major currencies, underpinned by a technical rebound after three days of losses and also lifted by positive sentiment due to advance estimates for Malaysia’s gross domestic product that came in better than expected.

Malaysia's economy was forecast to have grown by 3.9% in the first quarter of 2024 (1Q2024) based on advance estimates, compared to 3.0% in 4Q2023, driven by the services sector, according to the Department of Statistics Malaysia.

The local note rose vis-a-vis the Japanese yen to 3.0947/0978 from 3.1098/1133 a week earlier, improved against the British pound to 5.9533/9589 from 5.9562/9624, but slid against the euro to 5.0961/1009 from 5.0808/0861 previously.

The ringgit traded higher against Asean currencies except for the Singapore dollar.

It appreciated to 12.9668/9847 against the Thai baht from 13.0831/13.1036 on Friday last week, climbed versus the Philippine peso to 8.30/8.31 from 8.43/8.44, and improved against the Indonesian rupiah to 293.9/294.4 from 300.8/301.3 previously.

However, the local note fell vis-a-vis the Singapore dollar to 3.5113/5149 from 3.5090/5129 a week earlier.

https://www.theedgemarkets.com/node/708707