RINGGIT LIKELY TO TRADE BETWEEN 4.13-4.16 WITH SLIGHT UPWARD BIAS NEXT WEEK

By Durratul Ain Ahmad Fuad

KUALA LUMPUR, Nov 22 (Bernama) -- The ringgit is expected to trade between 4.13 and 4.16 against the US dollar next week, with a slight upward bias after mainly weakening this week as markets lowered expectations of a United States interest rate cut at the December meeting.

The local note fell on Monday, Tuesday and Thursday, rose on Wednesday, and ended the week firmer despite the stronger-than-expected US non-farm payrolls report for September.

The latest US non-farm payrolls report showed 119,000 jobs were created in September, exceeding forecasts.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the 41-day US government shutdown since Oct 1 has led to visibility on the data points.

“For now, the markets seem to believe that there will be no rate cuts based on the interest rate futures contract,” he told Bernama. 

Meanwhile, Kenanga Investment Bank Bhd anticipates a technical correction, with the ringgit likely to consolidate near RM4.15 against the US dollar next week as the Federal Reserve (Fed) remains cautious ahead of the December meeting. 

In a note released on Friday, it said the ringgit eased from 4.13 against the US dollar last Friday to 4.15 against the US dollar on Monday and briefly touched 4.16 against the US dollar on Tuesday after markets abandoned the view that the US reopening would deliver softer data and a dovish Fed.

“Expectations for a December rate cut fell below 50 per cent as risk-off sentiment revived safe-haven demand for the US dollar. Hawkish Fed minutes and the US Bureau of Labour Statistics’ decision to delay payroll revisions until after the Federal Open Market Committee meeting reinforced this shift,” it added.

Kenanga Investment Bank said the US non-farm September payroll gains exceeded expectations, though the unemployment rate also edged higher.

“With the Fed’s tone turning more hawkish and no major official releases between now and the Dec 10 meeting, markets now assign less than a 40 per cent chance of a December cut.

“Even if upcoming releases such as weekly jobless claims, the ADP report, retail sales, and the Producer Price Index (PPI) soften, they are unlikely to trigger the degree of deterioration needed to dislodge the prevailing Fed ‘pause’ narrative,” it said.

Kenanga Investment Bank’s medium-term call remains unchanged, expecting three additional rate cuts from the Fed over the next year.

“A December pause would not alter our bearish view on the US; it would merely shift the timing. We still think US weakness will become clearer in mid-December, once fresh labour-market data arrive.

“For Malaysia, steady foreign inflows into local bonds, continued repatriation of export earnings, and a broadly stable macro backdrop should keep the ringgit relatively firm into year-end,” it added.

On a weekly basis, the ringgit weakened against the greenback, closing lower at 4.1460/1495 compared with 4.1290/1345 last week.

The local note traded higher against a basket of major currencies.

It gained against the British pound at 5.4143/4188 from 5.4313/4385, strengthened versus the euro to 4.7779/7819 from 4.7983/8047, and improved against the yen at 2.6453/6479 from 2.6690/6728 at last week’s close.

The ringgit also mainly trended lower against its ASEAN peers.

It rose against the Singapore dollar to 3.1695/1724 from 3.1720/1765 but depreciated versus the Indonesian rupiah to 248.0/248.3 from 247.1/247.5, fell against the Philippine peso to 7.04/7.05 from 6.99/7.00 and fell against the Thai baht to 12.7601/7759 from 12.7356/7580 previously.

-- BERNAMA