KUALA LUMPUR: When all eyes will be on the economic stimulus package to be announced on Thursday, the ringgit is expected to trade between 4.16 and 4.22 against the US dollar next week, weighed down by the delay of work resumption in China.
Prime Minister Tun Dr Mahathir Mohamad will announce an economic stimulus package on Feb 27,2020 to mitigate the adverse external economic impacts of the COVID-19 outbreak.
Commenting on that, FXTM market analyst Han Tan said should concerns over the COVID-19 continue to climb in the week ahead, that could result in US dollar-ringgit revisiting levels not seen since Q3 2019 via a sustained presence above the 4.20-mark.
"However, should the COVID-19 outbreak show meaningful signs of stabilising, that could prompt the currency pair to trade closer to the 4.16 support level," he said in a note on Friday.
Meanwhile, AxiCorp chief market strategist Stephen Innes opined that the ringgit is likely to hover between 4.18 and 4.22 next week, as the delay of work resumption in China due to COVID-19 could hit the tourism and export industries in Malaysia.
"Real-time China work resumption barometers, including property sales, traffic congestion and coal use, are all lagging 2018 and 2019's metrics by a considerable margin.
"But what's worrying is that they are flatlining at the lows, suggesting a further delay in China's industrial engines coming back online," he told Bernama.
Innes said the inescapable economic fallout is most probably underpriced, and suggests a rough week ahead for the ringgit, as the local note could get hit by a double whammy effect from tourism and export concerns due to the delays in China's work resumption.
For the week just ended, the ringgit ended lower against the US dollar at 4.1900/1940 compared with last Friday's 4.1360/1400.
The ringgit was mainly influenced by movements of regional currencies especially the Chinese yuan and South Korean won, due to worries over COVID-19 on the economic growth of these two countries.
The positive data in the US housing market and steady Federal Open Market Committee (FOMC) meeting minutes also sent the ringgit lower on Thursday.
On a Friday-to-Friday basis, the local currency was traded mostly lower against a basket of currencies, except against the yen.
It declined against the Singapore dollar to 2.9924/9957 from 2.9751/9797 last Friday, fell against the pound to 5.4110/4178 from 5.3904/3973 and depreciated against the euro to 4.5286/5346 from 4.4851/4902.
The local note strengthened against the yen to 3.7504/7550 compared with 3.7665/7705 last Friday. - Bernama
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