Ringgit to trade softer against US dollar next week

The ringgit is expected to be softer against the US dollar and trade between RM4.45 and RM4.48 next week, as investor sentiment is dampened by expectations of US interest rates increase.

Affin Hwang Investment Bank Vice-President/Head of Retail Research, Datuk Dr Nazri Khan Adam Khan, said the US Federal Reserve chair, Janet Yellen, had already hinted of further interest rate increases following a strong employment and inflation data released last Wednesday.

"Bank Negara Malaysia's decision to maintain the overnight policy rate at 3.00 per cent is also seen as dovish, and coupled with the softer commodity prices, it will drag the ringgit lower," he told Bernama.

Meanwhile, Hong Leong Research said the ringgit had strengthened 0.22 per cent week-on-week to 4.4490 against the greenback but slipped against the currencies of seven of the G10 countries amid signs of unsustainable recovery in oil prices.

"We are slightly bearish on the ringgit against the US dollar next week, as the anticipated retreat in market activity ahead of the Chinese New Year holidays will stem buying support.

"However the local note could still advance if oil prices recover further and on a softer US dollar, but we reckon gains will be modest at best," it said.

For the week just-ended, the ringgit was traded higher at 4.4450/4480 against the greenback compared with last Friday's 4.4600/4640.

The local note also ended mostly higher against other major currencies except for the British pound.

The ringgit appreciated versus the Singapore dollar to 3.1112/1135 from 3.1243/1282 last Friday, increased against the yen to 3.8619/8648 from 3.8898/8949 and improved against euro to 4.7321/7358 from 4.7468/7524.

It fell against the British pound to 5.4625/4679 from 5.4439/4497 previously. -- Bernama