KUALA LUMPUR, Nov 26 – Trading in the ringgit is expected to remain volatile next week and dip to the RM4.48 level to the US dollar before stabilising and rebounding. The rebound will come in the wake of an expected interest rate hike by the US Federal Reserve (Fed) in December.
Affin Hwang Investment Bank Vice-President/Retail Research Head Datuk Dr Nazri Khan Adam Khan said while Bank Negara Malaysia (BNM) has retained the overnight policy rate (OPR) at three percent, it is almost certain that the Fed will raise interest rates.
“The odd monies going out from Malaysia is moving towards the US. It has nothing to do with the country’s economic fundamentals which are strong and growth is expected in 2017. My view is that the outflow is for the short-term and the ringgit will soon stabilise,” he said.
He said the ringgit was not the only currency affected by the US interest rate factor, as India’s Rupee, China’s Renminbi and Indonesia’s Rupiah were among other emerging market currencies impacted too. Nazri Khan said the ringgit may further weaken due to foreigners repatriating their money at year-end, which is a norm.
On another note, he said the historical Malaysia and China trade agreements worth RM144 billion signed recently would result in funds coming into the country. He also added that they believe the money will come in gradually next year and hopefully this can also cushion the ringgit’s position against the US dollar.
For the week just-ended, the ringgit traded weaker at 4.4530/4600 against the greenback from 4.4140/4190 last Friday. It ended mostly lower against other major currencies. The ringgit appreciated against the yen to 3.9379/9455 last Friday from 3.9874/9948, but declined against the Singapore dollar to 3.1159/1224 from 3.0962/0008. The local unit fell to 4.7175/7267 against the euro from 4.6780/6837 and eased against the British pound to 5.5538/5639 from 5.4734/4813.