Ringgit to be volatile against US dollar next week

The ringgit traded lower against major currencies this week.

KUALA LUMPUR: The ringgit is expected to be volatile against the US dollar next week given that global investors would try to get a better reading on US-China trade ties moving forward and their implication on global growth.

FXTM analyst Han Tan said the broader market sentiment as well as other external factors are expected to have a major impact on the ringgit’s performance, where more risk aversion may see the dollar climb past the 4.15 level.

As for the domestic economic calendar, he said all eyes will be on Malaysia’s first quarter (Q1) Gross Domestic Product (GDP) figures, which will be announced on Thursday.

“Markets will be keen to learn how Malaysia fared amid unresolved trade tensions between major economies during the first three months of 2019 before higher US tariffs were imposed on Chinese goods in May.

“However, seeing how new US tariffs could be placed soon on another US$325 billion worth of Chinese goods, potentially further dampening the global growth outlook, any subsequent adverse effects on Malaysia’s economy may likely be mitigated by policymakers, ensuring that domestic growth conditions remain robust,” Han told Bernama.

For the week just ended, the ringgit traded lower against the US dollar as investors remained mainly muted on Bank Negara Malaysia’s (BNM) announcement on the overnight policy rate (OPR).

On May 7, BNM cut the OPR by 25 basis points to 3%. The last change to the OPR was made on Jan 25, 2018, when it increased the rate by 25 basis points to 3.25%.

The ringgit was also influenced by investors’ concerns about an escalation in trade tensions between the US and China.

On a Friday-to-Friday basis, the ringgit fell to 4.1570/1600 against the US dollar from 4.1410/1440 previously.

It was also traded lower against other major currencies.

The local note weakened against the Singapore dollar to 3.0503/0534 from 3.0355/0379, and the Japanese yen to 3.7843/7880 from 3.7142/7179.

The ringgit also went down against the British pound to 5.4091/4147 from 5.3792/3843, and the euro to 4.6683/6733 from 4.6185/6230.