KUALA LUMPUR: The ringgit is poised to trend higher next week to 4.65 against the US dollar, supported by positive economic indicators, said an investment bank.

Kenanga Investment Bank Bhd said the indicators include stable labour market conditions, record-high distributive trade sales values and Bank Negara Malaysia's status quo on the Overnight Policy Rate (OPR).

"This has helped bolster the ringgit, enabling it to overcome the greenback's strength and appreciate by more than 0.4 per cent on a Thursday-to-Thursday basis," it said in its Ringgit Weekly Outlook note.

It further said the solid domestic Industrial Production Index (IPI) reading for May 2024 released on Friday, coupled with strong second quarter 2024 (2Q 2024) preliminary Gross Domestic Product (GDP) reading expected next week, may also boost Malaysia's economic prospects.

From a technical viewpoint, with a potentially weaker US retail sales reading and dovish remarks by the US Federal Reserve (Fed), the ringgit's movement towards 4.65 against the US dollar is possible, though profit-taking activities may limit gains. 

During the past week, the exchange rate of ringgit and the US dollar moved between a low of 4.713 on July 9 to a high of 4.668 on July 12.

Year to date, the ringgit stood out as the second best-performing currency in the Asian region, experiencing a modest depreciation of 1.56 per cent against the US dollar, following closely behind the Indian rupee which eased by 0.37 per cent against the greenback.

The Brunei dollar and Singapore dollar each saw a 1.70 per cent decline, while the Indonesian rupiah slipped by 4.57 per cent and the Philippine peso slid by 5.15 per cent versus the US dollar.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid expected the ringgit to experience some correction as it is already in the overbought territory based on the technical charts.

"On that note, the ringgit-US dollar would linger around RM4.67 to RM4.68," he said.

He added that the focus next week would be on China's 2Q 2024 GDP data on July 15, European Union's Consumer Price Index print on July 17 and the European Central Bank monetary policy decision on July 18.

On a Friday-to-Friday basis, the ringgit was higher at 4.6700/6730 against the US dollar from 4.7065/7110 a week ago.

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

The local note gained versus the euro to 5.0838/0870 from 5.0953/1001, but was lower against the British pound to 6.0481/0520 from 6.0182/0240 last Friday and eased vis-a-vis the Japanese yen to 2.9338/9359 from 2.9286/9315 a week earlier.

The ringgit was traded mixed against ASEAN currencies.

It rose against the Philippine peso to 8.00/8.00 compared with 8.04/8.05 a week earlier but fell versus the Indonesian rupiah to 289.3/289.7 from 289.1/289.5.

The ringgit increased vis-a-vis the Singapore dollar to 3.4768/4793 from 3.4876/4912 but dipped versus the Thai baht to 12.9023/9160 from 12.8646/8818 last Friday.

 - BERNAMA