Ringgit expected to revisit 4.46 level in week ahead

Photo by Zahid Izzani Mohd Said/The Edge

Photo by Zahid Izzani Mohd Said/The Edge

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KUALA LUMPUR (Nov 26): The ringgit is likely to revisit the 4.46 level next week, last seen in August, as market mood continues to be lifted by renewed interest rate hopes and optimism about the new Government.

SPI Asset Management managing director Stephen Innes said 10th Prime Minister Datuk Seri Anwar Ibrahim intends to focus on stability and the economy, which will benefit the local note.

“The market views the Pakatan Harapan leader as market-friendly.

“Parliament will prioritise approving the budgets for the Government’s short-term operating expenses, and will aim to table Budget 2023 in a month or so after that,” he told Bernama.

Nevertheless, Innes said that during the coming week, the market will see a heavy calendar involving US Federal Reserve (Fed) speakers, including speeches from New York Fed president John Williams and St Louis Fed president James Bullard next Monday (Nov 28).

Fed chair Jerome Powell will speak about the economy and the labour market next Wednesday.

The "second" estimate of third-quarter US gross domestic product, based on more complete data, will be released on the same day.

“They will remain hawkish, trumpeting the Fed’s inflation-fighting credentials. This could hold back the ringgit early in the week, given how quickly we have come on the rally front.

“But since I think hawkish Fed speak is a low bar to hurdle given the downtrend in US inflation, the ringgit could trade even stronger towards the end of the week,” he noted.

The ringgit kicked off the week just ended on a weak tone as the first-ever hung Parliament in Malaysia after the 15th general election last Saturday shook investors’ confidence.

The local currency then made a turnaround and rallied as much as 1.8% to its highest in over two months versus the US dollar on Thursday, with the appointment of Anwar as the new PM easing the political uncertainty.

The ringgit was the best-performing currency in Asia on Thursday, also boosted by continued hope that price pressure had started to ease, with the Fed’s November meeting minutes pointing out that US interest rate hikes may slow soon.

On a week-on-week basis, the ringgit jumped against the greenback to 4.4795/4890 on Friday, from 4.5490/5565 at the end of trading in the previous week.

The local note was also traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.2573/2645 from 3.3091/3150 a week ago, rose vis-a-vis the yen to 3.2118/2188 from 3.2581/2637, and strengthened against the euro to 4.6551/6650 from 4.7146/7224 previously.

The ringgit, however, was lower against the pound to 5.4094/4209 from 5.4069/4159 at the end of trading in the previous week.