The ringgit is likely to trend lower against the US dollar next week on lack of positive catalysts, said an analyst.
FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said a lower volume of tier-one economic data reports is set to be announced next week, apart from the latest US’ Federal Open Market Committee release scheduled for Aug 22 and Malaysia’s inflation report on Aug 24.
He noted that if the ringgit falls below the 4.10-level against the greenback during the week just ended, it would open the door to a potential return to 4.15 over the coming weeks.
“This increases the likelihood that the direction of financial market movements will continue to be dictated by external drivers. Trade war headlines and political risk will be the two likely culprits of volatility,” he told Bernama.
Jameel said emerging markets would be hoping that the news late this week that China will resume trade talks with the United States later in August will provide the needed catalyst to inspire some risk appetite back into investors’ portfolios.
“If positive headlines arise from these trade talks, it increases the probability that investors will be tempted back into emerging markets, meaning buying demand for the ringgit and its regional peers would benefit from improved support,” he added.
The ringgit was traded lower throughout the week just ended on the back of the Turkish lira crisis and Malaysia’s weaker-than-expected economic growth in the second quarter of this year.
Supply disruptions saw Malaysia registering a slower 4.5 per cent growth for the second quarter (Q2) of 2018 compared with 5.8 per cent in the same period a year ago, far lower than expected by many economists.
On a Friday-to-Friday basis, the local note fell to 4.1050/1080 against the greenback from 4.0830/0870 in the preceding week.
Against other major currencies, the ringgit also decreased against the Singapore dollar to 2.9842/9868 against 2.9781/9813 and fell against the yen to 3.7129/7173 from 3.6800/6846.
The local unit rose against the British pound to 5.2150/2204 versus 5.2193/2248 in the previous week and strengthened against the euro to 4.6723/6765 from 4.6779/6837.