KUALA LUMPUR, Malaysia (July 3): The ringgit will remain under pressure against the US dollar next week as currency traders keep a close eye on events in the United States while also anticipating the Bank Negara Malaysia’s (BNM) monetary policy committee meeting on Thursday. The US dollar/ringgit exchange rate has been gyrating on the weaker side throughout the last week, according to Bank Islam Malaysia Bhd senior economist Mohd Afzanizam Abdul Rashid, despite the US dollar index rising to 92.632 points yesterday.
“As the case for US quantitative easing tapering gets traction, the US dollar’s value is projected to rise, putting pressure on emerging market currencies, especially the ringgit.” “Perhaps the ringgit will remain in the RM4.16 range next week,” he told Bernama.
Mohd Afzanizam stated data such as the Malaysian Purchasing Managers Index (PMI) plummeted dramatically to 39 points in June after sustaining more than 50 points in the previous two months, indicating that the full movement control order (FMCO) was having a significant impact on manufacturing activity.
He continued, “It has a negative influence on the ringgit.”
Meanwhile, according to another economist, Adam Mohamed Rahim, the BNM’s monetary policy committee meeting, where the central bank may retain the existing overnight policy rate (OPR) of 1.75 percent, is a crucial event that investors in Malaysia would be watching.
“A rate hike in 2021 is premature due to a surge in inflation, which is partly attributable to the low-base character of the data and is largely related to oil prices.”
Furthermore, the country is still recovering, with current [daily new Covid-19] cases still above 5,000 per day, thus the present OPR is regarded suitable to help the economy at this time,” he added.
In the meantime, the ringgit rose versus a basket of major currencies.
The local currency strengthened against the Singapore dollar, rising to 3.0778/0818 from 3.0964/0980 the week before, and against the British pound, rising to 5.7188/7256 from 5.7781/7802, and against the euro, rising to 4.9171/9230 from 4.9627/9645 the week before.
It also increased from 3.7526/7540 to 3.7303/7351./n
