KUALA LUMPUR: The ringgit is expected to continue its upward momentum next week amid the likelihood of a US dollar weakness, supported by a rebound in market sentiment following confirmation of a pause in the US Federal Reserveâ€™s (Fed) policy tightening.
FXTMâ€™s global head of currency strategy, Jameel Ahmad, said given the Fedâ€™s dovish outlook this past week, the ringgit might start contemplating a path towards the 4.00 psychological level.
â€œThe ringgit has been provided with a helping hand by the weaker dollar following the Fedâ€™s extra-dovish pivot during its monetary policy meeting this week by ruling out expectations for a US interest rate hike this year.
â€œCrude oil prices, which have recorded a new year-to-date high, could also lend support to the ringgit,â€ he told Bernama.
Jameel said the Malaysian economic calendar was light next week, leaving the spotlight mostly on external factors to influence the ringgitâ€™s performance.
Gains in the emerging currencies including the ringgit could be capped by shifting tones in the ongoing US-China trade negotiations, slowing global growth, and persistent Brexit uncertainties, which are still expected to feed into emerging market sentiment in the week ahead.
During the week just ended, the ringgit was traded on the upside bias as the US dollar generally weakened on the back of expectations of the Fedâ€™s dovish stance.
The Fedâ€™s move to halt interest hikes for the year further supported the emerging Asian currencies, including the ringgit.
For the week just ended, Hong Leong Bank Bhd said in a note that the ringgit strengthened about 0.71 per cent week-on-week against a weak greenback but ended mixed against the Group of Ten (G10) countries.
â€œThe US dollar is now tilted to the downside after losing 4.0900 but remains supported while holding above 4.0500. Breaking below this level will likely trigger a drop to 4.0300; otherwise, it is still inclined towards 4.1030 in the coming weeks,â€ it added.
On a Friday-to-Friday basis, the ringgit rose to 4.0600/0650 from 4.0890/0940 against the US dollar.
The ringgit was also traded higher against other major currencies last week, except the Japanese yen.
It gained against the Singapore dollar to 3.0047/0096 from 3.0197/0245 a week earlier and increased against the euro to 4.5882/5959 from 4.6287/6360.
The local currency appreciated versus the British pound to 5.3178/3260 from 5.4220/4307 in the previous week, but fell against the Japanese yen to 3.6735/6784 from 3.6623/6671. â€” Bernama