KUALA LUMPUR: The ringgit is expected to trade range-bound in a cautious mode, hovering around the RM4.76 level with an upside bias against the US dollar this week, says an analyst.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit had been in an oversold position for some time and a long overdue technical correction is expected to emerge to lift the currency slightly higher.
He noted that issues surrounding the timing for the US rate cut and the anticipation for a forceful China economic stimulus will continue to drive market sentiments.
This week, the key focus will be the US consumer price index (CPI), which will be released tomorrow, and Malaysia’s fourth quarter of 2023 (4Q24) gross domestic product (GDP) announcement on Feb 16, he said.
“We opine that the final-quarter gross domestic product (GDP) of 2023 would be fairly the same as the advance estimates of 3.4%, bringing the full-year 2023 growth to 3.8%.
“Malaysia’s GDP for this year is likely to be better than 2023 on account of improvement in net exports and domestic demand.
“The latest assessment of the government’s economic outlook this year will be unveiled through the announcement of GDP for 4Q23. So, the market is going to be cautious,” he told Bernama.
Mohd Afzanizam said the market will also monitor the US CPI data and if it is higher than expected, it would strengthen the narrative to increase interest rates.
For the week just ended, the local note was traded mixed while weighing on various US economic data to gauge the US interest rate path as well as expectations of China’s huge stimulus package.
On a Friday-to-Friday basis, the ringgit was traded lower against the US dollar at 4.7595/7705 compared to 4.7155/7185 a week earlier.
However, the local unit was traded higher against other major currencies.
It rose vis-a-vis the Japanese yen to 3.1849/1925 from 3.2142/2164 a week earlier, increased against the British pound to 6.0017/0156 from 6.0160/0199 and appreciated versus the euro to 5.1241/1359 versus 5.1352/1384 previously.
