PETALING JAYA: The ringgit is expected to trade between RM4.23 to RM4.25 against the US dollar in the near term, supported by improving domestic fundamentals, rising foreign direct investment inflows, and infrastructure catalysts like the resumption of the MRT3 project, analysts say.
In a report, Kenanga Research said the ringgit has been holding steady between RM4.24 and RM4.25 which showed resilience despite the US dollar Index trading above 98.
“While the latest inflation data cooled expectations for a September rate cut, we still maintain our call for 25 basis points cuts in both September and December, amid a gradual softening in the US labour market,” the research house said.
It said the US Dollar Index had extended gains last Monday following reports of potential 30% US import tariffs on goods from the European Union (EU) and Mexico.
Furthermore, a higher-than-expected US Consumer Price Index print further boosted the momentum of the US dollar with markets now assigning just a 50% chance of a US Federal Reserve (Fed) rate cut in September.
“A softer US Producer Price Index print also did little to shift the market’s now less dovish view,” Kenanga Research noted.
It added that, while China had a strong second quarter in terms of gross domestic product, and Nvidia had resumed sales of artificial intelligence chips to the country, sentiment around the world’s second-largest economy remains cautious.
As such, the research house said markets are likely to turn their focus to the Fed to gauge if any hawkish tone could reinforce US dollar strength and dampen risk appetite.
“Beyond US data, geopolitical focus remains on US-EU trade tensions. While escalation risks persist, we expect a more constructive outcome that could help restore confidence and provide modest support to risk-on currencies like the ringgit,” Kenanga Research said.
Meanwhile, Malaysian Government Securities (MGS) and Government Investment Issues (GII) saw their yields move last week, ranging between minus 5.6 and 1.5 basis points across the curve.
Kenanga Research added the 10-year MGS edged up 0.2 basis point to 3.435%, while the 10-year GII rose 0.4 basis point to 3.487%.
