The ringgit will likely stage further recovery against the US dollar at below 4.0 level next week, tapping on the greenback’s weaknesses, an analyst said.
FXTM vice-president of corporate development and market research Jameel Ahmad said the persistent lack of confidence from the markets in the US interest rate hike and consistent comments from the US Federal Reserve over its possible timeframe had pushed investors towards the emerging markets.
“Any ongoing US dollar weakness should be monitored and accessed as a possible opportunity for the ringgit to regain further momentum,” he told Bernama.
However, Jameel pointed out that the threat from possible profit-taking on stocks could feed through to weaker risk appetite, which means that the psychological downside level for the ringgit/US dollar is at 4.10.
“Investors should also pay attention to any return to risk aversion in the markets, which has taken my eyes (attention) following a return of demand for the yen in recent days,” he told Bernama.
Jameel said the consistent buying demand for the yen was not supported by economic confidence in the Japanese economy and suggested that there could be some weakening to risk appetite in the market.
Another dealer said the ringgit would also be supported by expectations of improving oil prices next week.
Throughout the week, the ringgit was traded mostly lower against the US dollar.
On a Friday-to-Friday basis, the local note rose against the greenback to 4.0105/0165 from 4.0260/0310 previously.
Against other currencies, the ringgit ended mostly lower except the Singapore dollar.
The ringgit increased against the Singapore dollar to 2.9776/9834 from 2.9898/9939 last Friday but was sharply lower against the yen to 4.0017/0093 from 3.9393/9454.
It weakened against the British pound to 5.2698/2793 from last Friday’s 5.2153/2230 and declined against the euro to 4.5375/5455 from 4.4882/4946 previously.