GDP data to influence ringgit next week

KUALA LUMPUR: The ringgit movement next week will be influenced by the development in the US monetary policy and Malaysia's gross domestic product (GDP) data, a dealer said.

FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said the ringgit and other emerging market currency movement would depend on the overall reaction to the upcoming US Federal Reserve's interest rate decision.

“Until the GDP reading next Friday, the trajectory of the US dollar will play a major role in dictating fluctuations in the Malaysian ringgit,” he said in a statement today.

He said the GDP reading would provide indications for any signs of slowing down for one of the most important emerging markets in Asia.

A slowdown in economic growth was felt in other emerging markets in recent months as a result of the ongoing external uncertainties that are preventing investors from investing in emerging markets, he added.

Meanwhile, Oanda Head of Trading Asia-Pacific Stephen Innes said the ringgit is expected to test the 4.20 level against the US dollar in the coming weeks as the local unit continued to struggle due to the divergence of Bank Negara Malaysia and US Federal Reserve's policies.

“The ringgit support next week stood at 4.16 against the greenback, while resistance 4.20. The 4.20 resistance call is coming nearly a month earlier than I had anticipated,” he added.

For the week just ended, the ringgit was rangebound versus the greenback during the holiday-shortened week.

The local unit strengthened in the middle of the week as it was influenced by the outcome of the US mid-term elections before US Federal Reserve's reaffirmation of its hawkish monetary policy stance rebounded the greenback.

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The market was closed on Tuesday for the Deepavali festival.

On a Friday-to-Friday basis, the local note weakened to 4.1780/1810 against the US dollar from 4.1600/1650 in the previous week.

However, against a basket of major currencies, the local note was traded mostly higher.

The ringgit appreciated against the Singapore dollar to 3.0315/0341 from 3.0321/0362 and vis-a-vis the Japanese yen, it rose to 3.6685/6714 from 3.6889/6940.

The local currency fell against the British pound to 5.4343/4386 from 5.4196/4266 but strengthened against the euro to 4.7362/7413 from 4.7582/7643. — Bernama