KUALA LUMPUR: The ringgit is likely to trade from neutral to positive mode between 4.70 and 4.71 against the US dollar next week as the Federal Reserve (Fed) chairman Jerome Powell's testimony to the United States (US) Congress will be closely followed by the market participants.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said this was in order to gauge the latest Fed assessment on inflation risk. 

"Also, Bank Negara Malaysia's (BNM) Monetary Policy Committee members will deliberate their overnight policy rate decision on July 11, with most economists expecting the benchmark interest rate to stay unchanged at 3.00 per cent," he told Bernama.

To some degree, he said this might give some advantage, and should the Fed really start cutting their rates and the BNM remain status quo, it would lead to narrow interest rate differentials between the two countries.

Meanwhile, Kenanga Investment Bank Bhd has maintained a positive outlook for the ringgit in the coming week, though some investors may still favour the US dollar as long as Trump leads in the polls.

"Domestically, the ringgit could remain supported by BNM's policy status quo and a favourable macroeconomic outlook, provided retail sales and Industrial Production Index readings remain strong," it said. 

Earlier this week, MIDF Amanah Investment Bank Bhd also expected the local note to appreciate in the second half of 2024 and close the year stronger at 4.43 against the greenback as the Fed moves closer to cutting interest rates.

For the week just ended, the ringgit was traded mostly higher as weak US economic data points resulted in emerging currencies, including the ringgit, appreciating against the US dollar. 

On a Friday-to-Friday basis, the ringgit appreciated to 4.7065/7110 against the US dollar from 4.7160/7190 a week ago.

The ringgit was traded mostly lower against a basket of other major currencies.

The local note declined against the British pound to 6.0182/0240 from 5.9639/9676 on Friday last week, narrowed versus the euro to 5.0953/1001 from 5.0494/0526, but rose vis-a-vis the Japanese yen to 2.9286/9315 from 2.9345/9365 a week earlier.

The ringgit was traded mostly lower against ASEAN currencies.

It went up against the Philippine peso to 8.04/8.05 compared with 8.05/8.05 a week earlier but eased versus the Indonesian rupiah to 289.1/289.5 from 287.9/288.3, inched down vis-a-vis the Singapore dollar to 3.4876/4912 from 3.4792/4816, and shrank versus the Thai baht to 12.8646/8818 from 12.8508/8646 on Friday last week.

The market will be closed on Monday, July 8, 2024, in conjunction with the Awal Muharram replacement holiday and will reopen on Tuesday.