Ringgit expected to trade with slight positive bias next week

KUALA LUMPUR: The ringgit is expected to trade with a slight positive bias against the US dollar next week as investors assess the outlook for the US interest rates.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said investors' main focus will be on October's US Consumer Price Index and Producer Price Index, scheduled for release on Tuesday and Friday respectively.

"Softer inflation readings could weigh on US Treasury yields and the greenback, providing support for the ringgit. However, stronger-than-expected inflation could reverse such gains," he told Bernama.

Domestically, Mohd Afzanizam said Malaysia's industrial production, labour market and wholesale and retail trade figures will provide further indications of Malaysia's economic resilience.

He said Bank Negara Malaysia's decision to maintain the overnight policy rate (OPR) at 2.75 per cent provides a stable policy backdrop.

"Nevertheless, trading could remain cautious as investors digest the US employment report due tonight, alongside post-midterm policy developments and geopolitical risks.

"Therefore, next week the ringgit is expected to trade within RM4.04-RM4.06 against the US dollar," he said.

Meanwhile, SPI Asset Management managing partner Stephen Innes said the ringgit could regain ground and move towards the stronger end of its trading range if the equity market selloff intensifies enough to prompt traders to price in a less hawkish stance by the US Federal Reserve.

"However, much of the direction will once again depend on crude oil and equity markets rather than domestic fundamentals. If crude oil prices remain elevated and global equities continue to face selling pressure, particularly in the semiconductor sector, the ringgit could struggle to make further gains.

"For now, investors will be watching Wall Street and oil markets for clearer direction. Until conditions in both markets stabilise, Asian currencies, including the ringgit, are likely to remain under pressure," he said

Looking ahead, Innes expects the ringgit to trade within a relatively narrow range of RM4.045 to RM4.065 against the US dollar.

Meanwhile, on a Friday-to-Friday basis, the ringgit eased against the greenback to 4.0565/0610 from 4.0555/0600 a week earlier.

The local currency traded higher against a basket of other major currencies during the week.

It rose vis-a-vis the Japanese yen to 2.5616/5646 from 2.5782/5812 on the previous Friday and appreciated against the British pound to 5.4304/4365 from 5.4461/4522, and gained versus the euro to 4.5315/5365 from 4.5413/5464 a week earlier.

The ringgit traded mostly lower against Asean currencies.

It advanced versus the Singapore dollar to 3.1657/1694 from 3.1753/1791 a week earlier.

However, the local note inched down against the Indonesian rupiah to 224.2/224.6 from 223.4/223.8, slipped vis-a-vis the Thai baht to 12.0898/1105 from 12.0373/0561 at the end of last week, and it went down against the Philippine peso to 6.43/6.44 from 6.36/6.37 previously.