By Siti Radziah Hamzah
KUALA LUMPUR, June 11 (Bernama) — The ringgit is expected to trade in cautious mode against the US dollar next week, said an analyst.
He said the United States Federal Open Market Committee (FOMC) is expected to deliver another half-a-point rate hike to cool soaring inflation in the country when it wraps up its meeting on June 14-15, 2022.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the 50 basis points hike in the Fed Fund Rate appears to have been fully priced in as inflation would likely to stay elevated.
He added that the inaction by the European Central Bank (ECB) on Thursday appeared to be giving further advantage to the US dollar with the US Dollar Index (DXY) currently hovering at more than 103 points.
“As such, the US dollar/ringgit would linger around RM4.39-RM4.40 next week. It is quite a challenging outlook as the US Federal Reserve (Fed) is also likely to add another 50 basis points hike in its July meeting.
“Until there are no signs that the Fed would pause, the US dollar would continue to be the highly sought-after currency,” he told Bernama.
On Thursday, the ECB said it would end a long-running bond-buying scheme on July 1, and signalled a string of interest rate hikes from next month as it battles high inflation.
For the week just ended, the ringgit was traded range-bound against the US dollar amid the expectation that the near-term economic outlook appears to be challenging.
The ringgit breached the 4.4-level against the greenback on Friday (June 10).
On a weekly basis, the ringgit was weaker against the greenback at 4.4000/4030 on Friday compared to 4.3870/3910 a week earlier.
The local note was traded mostly higher against a basket of major currencies on a Friday-to-Friday basis.
The ringgit was higher against the Singapore dollar to 3.1856/1880 from 3.1947/1981 a week earlier but eased vis-a-vis the Japanese yen to 3.2870/2895 from 3.3728/3759 previously.
It appreciated against the euro to 4.6618/6650 from 4.7143/7186 and strengthened versus the British pound to 5.4784/4822 from 5.5171/5221 last week.
— BERNAMA