Image Credits: The Star
The Malaysian ringgit is poised for further appreciation next week, despite a cautious stance among traders regarding crucial US economic indicators. According to Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, key data points such as the US ISM Manufacturing Index, the Job Openings and Labor Turnover Survey (JOLTS), ADP employment changes, and Nonfarm Payroll (NFP) figures will be pivotal in shaping market sentiment.
Dr. Mohd Afzanizam anticipates that the ringgit will maintain robust support, with an immediate support level identified at RM4.0728. The upcoming week promises to be data-heavy, with traders also paying close attention to Japan’s Tankan Survey for insights into business sentiment in the region.
Stephen Innes, managing director of SPI Asset Management, noted that the ringgit’s recent rally extends beyond the typical US-Malaysia interest rate differential. He attributes much of the current momentum to China’s stimulus initiatives, which have put the currency in a delicate position as its strength increasingly hinges on the prospects for China’s economic recovery.
Innes expressed that, in the short term, the ringgit is likely to remain supported by expectations of further Federal Reserve rate cuts, even as it remains susceptible to rising US yields. He cautioned that next week might see reduced local activity due to China’s Golden Week, making the ringgit more reactive to global trends, especially US economic data.
With the Malaysian ringgit having strengthened by 1.6% against the US dollar week-on-week and 14.76% over six months, it closed at 4.1230/1280 against the dollar, marking its strongest level since June 2021. The ringgit also appreciated against other major currencies, including the euro, British pound, and Japanese yen, while showing mixed results against ASEAN currencies, notably edging down against the Thai baht.
Overall, market observers will be closely monitoring US data next week to gauge its impact on the ringgit’s trajectory.