KUALA LUMPUR: The ringgit is expected to rebound slightly against the US dollar next week in anticipation of positive domestic economic data that could support sentiment for the local currency, said FXTM Research Analyst Lukman Otunuga.
He said the economic data include the monthly retail sales, unemployment rate, construction output for the second quarter and industrial production in June, which are due to be released next week.
Nevertheless, he said any meaningful gains could be threatened by external factors.
“With expectations over higher US interest rates boosting the dollar and accelerating capital outflows from emerging markets, the short to medium-term outlook for the ringgit remains tilted to the downside.
“If the US dollar continues to appreciate, the ringgit could challenge the 4.090 level in the near term,” he told Bernama.
For the week just ended, the ringgit depreciated to levels not seen since December 2017 of around 4.08, dampened by the broadly stronger US dollar, as well as escalating global trade tensions.
US President Donald Trump’s threat to impose a 25 per cent tariff on US$200 billion worth of Chinese imports simply fuelled risk aversion, ultimately denting appetite for emerging assets and currencies.
It was worth noting that the ringgit was not alone, as the Chinese renminbi, Singapore dollar and many other emerging currencies felt the heat.
On a Friday-to-Friday basis, the local note depreciated to 4.0800/0850 against the greenback from 4.0600/0650 last Friday.
Against other major currencies, it also decreased against the Singapore dollar to 2.9770/9811 from 2.9763/9806, fell against the yen to 3.6523/6574 from 3.6508/6562 and declined against the euro to 4.7222/7292 from 4.7193/7264.
The ringgit, however, rose against the British pound to 5.3064/3146 from last week’s 5.3117/3199.
The UK currency weakened broadly after the Bank of England’s monetary policy committee decided to hike the base rate by 25 basis points to 0.75 per cent, a move that seem unfavourable among investors.-- BERNAMA