kuala lumpur: The ringgit is expected to trade in the current 4.42-4.45 range against the US dollar next week as risks of a lengthening interest rate cycle increase following another hot inflation report.
Steven Innes, managing director of SPI Asset Management, said investor interest is likely to focus on safe currencies as a hedge against the hawkish US Federal Reserve.
“Continued strength in inflation data suggests the Fed’s job is far from done,” he said, noting that the recent U.S. Producer Price Index (PPI) was “a longer, higher interest rate path.” ‘, he added.
“It got worse when the Fed hawks started pitching the idea of a 50 basis point rate hike in March and as the market geared up for that idea. ‘s reaction will be worth watching in the future,” he told Bernama.
US PPI, which measures what suppliers charge businesses, rose 0.7% in January 2023, beating expectations of 0.4%.
Earlier reports have shown US inflation to continue rising, increasing pressure for the Fed to raise rates further.
The CPI rose 0.5% month-on-month in January, but inflation continued to ease to 6.4% year-on-year, according to the Bureau of Labor Statistics.
This further strengthened the demand for US dollars in the global market.
Over the course of the week, the ringgit nearly fell against the dollar.
It ended the week at 4.4310/4345 compared to Friday’s close of 4.3320/3350.
Against a basket of major currencies, it was also significantly lower than it was a week ago.
Against the British Pound it fell from 5.2404/2440 to 5.2919/2961, against the Singapore Dollar from 3.2635/2663 to 3.3062/3093 and against the Euro from 4.6391/6424 to 4.7137/7174. .
However, the local unit rose from 3.3089/3114 to 3.2864/2892 against the Japanese yen. – Bernama