kuala lumpur: An expected moratorium on the US Fed Funds Rate is expected to lead to a weaker US dollar in the short term, so the ringgit will continue to gain traction next week.
Mohd Afzanizam Abdul Rashid, chief economist and head of social finance at Bank Muamalat Malaysia Bhd, believes the ringgit will break above the immediate support level of 4.4254 and remain near 4.4100 to 4.4200 next week.
In addition, attention will be focused on Malaysia’s first quarter (1Q) economic data, which will be released on May 12.
“Our preliminary estimates suggest that gross domestic product (GDP) could be around 5.0% to 5.5% in the first quarter, with domestic demand being the main driver of growth. ‘, he told Bernama.
He said Bank Negara Malaysia (BNM) remains optimistic about the outlook for the domestic economy.
This week, BNM’s Monetary Policy Committee (MPC) unexpectedly raised the Overnight Policy Rate (OPR) by 25 basis points to 3.00%.
At that level, the central bank said the benchmark interest rate would return to pre-crisis levels, more in line with the stronger state of the economy.
A snapshot of the May 2023 Monetary Policy Statement states, “We will ensure that the OPR supports sustainable growth while keeping inflation in check.”
The US Federal Reserve (Fed) also appears to have reached its final rate after raising rates by just 25 basis points on Wednesday, putting pressure on the dollar against a basket of major currencies.
Against the US dollar on Friday, the ringgit traded at a two-week high of 4.4350/4400, versus closing at 4.4600/4645 a week ago.
On the other hand, the euro is much weaker than it was a week ago against a basket of major currencies, apart from rising to 4.8900/8955 from last week’s 4.9011/9060.
The ringgit fell against the British pound from 5.5558/5614 to 5.5908/5971 and against the Japanese yen from 3.2770/2805 to 3.3050/3090.
The ringgit was also traded at various values to ASEAN countries.
The local note rose against the Indonesian rupiah to 302.1/302.6 from earlier at 303.9/304.3 and against the Philippine peso to 8.02/8.03 from 8.05/8.06.
It fell against the Thai baht to 13.1446/1661 from 13.0612/0801 and against the Singapore dollar to 3.3464/3507 from 3.3351/3387 the week before. – Bernama
