KUALA LUMPUR: The ringgit is expected to strengthen further next week on expectations of higher global crude oil prices and improved risk appetite for the local note, dealers said.
“The higher oil prices will give breathing space for producer countries such as Malaysia and ease pressure on shrinking oil and gas revenue,” said a dealer.
Affin Hwang Investment Bank Vice-President and Head of Retail Research Datuk Dr Nazri Khan Adam Khan said both the ringgit and crude oil prices are trending upward, which bodes well for local market sentiment.
“Oil prices have recovered from an early weakness as markets look towards a meeting of major producers next month.
“It has however, been a volatile week for oil prices as comments from officials of various Organisation of the Petroleum Exporting Countries fuelled market speculation that oil producers will not respect an agreement to freeze output as proposed by Saudi Arabia and Russia,” he added.
The benchmark Brent Crude settled at US$35.29 a barrel, up 2.6 per cent while, US West Texas Intermediate was 2.8 per cent higher at US$33.05.
Nazri said the local note is expected to strengthen to a week’s high of 4.1910 against the greenback.
Meanwhile, UOB Malaysia economist Julia Goh said the ringgit deserved a far stronger level on a fair value basis, but external factors which included a possible hike in US interest rates and moderate growth in China, will pressure the local note.
“We have revised our outlook for the ringgit to between 4.10 and 4.40 against the US dollar for the near-term.
“However, if at any point, the ringgit breaks below 4.09, it could strengthen further below 4.05, but again, it is a caution, depending on the external risks factors,” she added.
For the week just ended, the ringgit firmed to 4.2010/2070 from 4.2030/2100 versus the greenback last Friday, mainly due to the movement of crude oil prices.
The local unit fell against the Singapore dollar to 2.9996/9056 from 2.9893/9947 last Friday and weakened versus the yen to 3.7236/7299 from 3.7168/7240.
However, the ringgit rose against the euro to 4.6417/6500 from 4.6662/6748 and appreciated against the British pound to 5.8747/8856 from 6.0225/2342. --Bernama