KUALA LUMPUR: The ringgit is trading in a narrow range with emerging market currencies in Asia on Thursday showing muted reaction to the Federal Reserve’s policy decision and rate forecast.
Trading interest is also thin ahead of the Hari Raya Aidilfitri holiday on Friday.
The US$/ringgit is steady at 3.9940 vs range of 3.9922-3.9940.
Support is at 3.9430, 3.9213, 3.8533; resistance 4.0060, 4.0155, 4.0451
Fed’s overnight rate decision is unlikely to spur capital outflows from Asia as markets were prepared for four hikes this year and regional central banks have room to
defend their currencies, says Ken Cheung, a senior Asian FX strategist at Mizuho Bank in Singapore.
If the ECB joins the Fed in normalizing policy, this would accelerate outflows from the region and weigh on Asian forex.
Ringgit is among the currencies that’s most at risk from a deterioration in emerging-market manufacturing, with Malaysia’s forex reserves adequacy below the IMF’s suggested range: TD
Securities
In contrast, Goldman Sachs says U.S. real-money funds are generally constructive on the ringgit although there are concerns about Malaysia’s fiscal outlook following last month’s unexpected election result.
* 10-year bond yield ended little changed at 4.23% Wednesday.
* Govt’s review of large infrastructure projects and outstanding 1MDB debt will play key role in determining contingent liability risk on Malaysia’s credit profile: Moody’s Investors Service
* Trading on Bursa Malaysia will end after the morning session on Thursday, ahead of holiday on Friday. - Bloomberg
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