KUALA LUMPUR, June 26 concerns External concerns will continue to play a big part in determining the direction of the ringgit next week, with investors keeping a close eye on developments in the United States.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said talks about a possible U.S. quantitative easing resurface from time to time to influence the forex market to remain volatile in a near future.
“Expect the US dollar / ringgit to trade in a narrow range between RM 4.15 and RM 4.16 next week,” he told Bernama.
He explained that the markets would look at business confidence indicators such as the U.S. Manufacturing Supply Management Institute’s Purchasing Managers’ Index (PMI), which is expected to be around 61 points for June against 61.2 points in May.
“Employment figures will also be in the spotlight, such as the non-farm payroll (NFP), which is expected to be higher this month compared to last month. At the same time, the unemployment rate is expected to fall further to 5.7% in June, from 5.8% the previous month, ”he said.
Echoing a similar sentiment, Jeffrey Halley, senior Asia-Pacific market analyst at OANDA, said currency markets will continue to fluctuate with a slight trend in the strength of the US dollar.
“With an eye on next week’s PMIs from Asia and the US NFP, currency markets will continue to move sideways, with the US dollar quietly consolidating the gains of the previous week,” he said.
For the week just ended, the US dollar and Asian currencies did not see a noticeable downward correction this week, with the ringgit, Thai baht and Indonesian rupee recording virtually no gains, although the Korean won and the Philippine peso made up some lost ground.
“The rebound in fear of inflation was reflected in slightly stronger developed market currencies and not in emerging market currencies.
“This suggests that the markets remain concerned about the low level of US rates and the increased strength of the US dollar. I don’t disagree at all with that premise and next week’s US NFP numbers might answer that question for us, ”he added.
During this time, however, the ringgit traded mostly weaker against other major currencies.
Against the Singapore dollar, the local unit fell to 3.0964 / 0980 from 3.0851 / 0875 a week earlier, the local note depreciated against the British pound at 5.7781 / 7802 from 5.7526 / 7568, and against the euro it depreciated to 4.9627 / 9645 from 4.9308 / 9344 the week before.
However, against the yen, it fell to 3.7526 / 7540 from 3.7570 / 7598 previously. Bernama