Ringgit likely to decline further against US dollar next week

KUALA LUMPUR: The ringgit is likely to continue its decline against the US dollar next week due to higher inflation, said an analyst.

SPI Asset Management managing partner Stephen Innes said the ringgit may also struggle to hold onto gains due to various negative risk events, namely the concern about the increase in COVID-19 cases in China.

“Given the ringgit’s strong correlation with the Chinese Yuan, the ringgit could trend weak as traders headgear for the possible regional stock market outflow that may trigger when United States house speaker Nancy Pelosi visits Taiwan in August,” he told Bernama.

He said the market also will be heading into another jumbo ahead of the Federal Open Market Committee (FOMC) meeting next week and the United States Federal Reserve is expected to raise rates by another 75 basis points on July 27.

“This could keep the ringgit grounded until the FOMC is out of the way.

“My fear is that we could be moving into a short global recession that could hurt Asia exporters. So, the sum of all this negativity has me erring defensively,” he said.

Looking at the volatility, Innes said the ringgit is likely to trade within the RM4.4475-RM4.4575 range next week.

For the week just ended, the ringgit was traded mostly lower against the US dollar as the sentiment was weighed down by the stronger greenback.

The ringgit fell against the greenback at 4.4515/4545 on Friday, compared with 4.4480/4505 a week earlier.

The local note traded lower against a basket of major currencies on a Friday-to-Friday basis.

It depreciated against the Singapore dollar at 3.2011/2038 from 3.1688/1710 previously.

The ringgit eased against the Japanese yen to 3.2389/2413 from 3.2048/20699 previously, went down against the British pound to 5.3187/3222 from 5.2629/2658 and weakened versus the euro to 4.5201/5231 from 4.4662/4687 last week.

NST

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