Ringgit poised for technical correction against US dollar next week

KUALA LUMPUR, Jan 2 (Bernama): The ringgit is expected to experience some technical correction in the coming days, trading in the range of 4.1650 to 4.1750 against the US dollar, an analyst said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said in light of the recent appreciation, there could be a possibility that the ringgit might experience some correction on profit-taking activities.

For the coming week, investors are expected to focus on a slew of economic data from the United States (US) such as the Purchasing Managers' Index (PMI) numbers, US unemployment rate and the Nonfarm Payroll figures for December for clues on market direction.

"However, we remained constructive on ringgit against the US dollar pair with year-end target for 2022 standing at RM4.09. Possibility of higher Overnight Policy Rate as well as commodity prices might help improve the value of the ringgit going forward,” he told Bernama.

For the week-just-ended, the ringgit was traded higher, except on Wednesday when it saw some profit-taking, mainly influenced by the risk on mode and window-dressing activity heading towards the year-end while remaining cautious on the Omicron variant development.

It ended the week on a stronger note versus the US dollar at 4.1650/1680 at Friday’s close compared with 4.1935/1980 a week earlier.

On a year-on-year basis, Mohd Afzanizam said the ringgit depreciated 3.59 per cent at the close on Friday, the last trading day of the year, compared to 4.0203/0250 registered on Dec 31, 2020.

He shared that the ringgit had been quite volatile against the US dollar during the year, having moved from as low as 4.005 at the start of the year to as high as 4.24 during the second half of the year.

Meanwhile, the local currency was also traded mostly higher against other major currencies against the previous Friday.

It improved against the Singapore dollar to 3.0872/0899 from 3.0887/0954 last Friday, strengthened vis-a-vis the Japanese yen to 3.6186/6212 from 3.6660/6702, and firmed against the euro to 4.7194/7228 from 4.7567/7618 in the previous week.

However, it depreciated against the the British pound to 5.6277/6318 compared with 5.6226/6287 on Friday last week. - Bernama