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Ringgit attempts to stabilise against US dollar

14th May, 2018

KUALA LUMPUR: The ringgit is expected to be influenced by post-14th General Election (GE14) developments, as the local note aspires to stabilise against the US dollar this week.

These developments come with an upside bias medium-term outlook, backed by headline interest rates growth to be announced by Bank Negara Malaysia soon, said dealers.

FXTM Global Head of Currency Strategy & Market Research Jameel Ahmad said Malaysia gross domestic product (GDP) reading scheduled for Thursday, May 17, was also seen as a major event risk on the economic calendar.

“We expect the ringgit’s direction to be dictated by domestic news following the unexpected election outcome,” he said, adding that the anxiety and euphoria over GE14 would dissipate by the time the domestic markets reopen for trading this week.

Jameel said this should help prevent the ringgit from mirroring similar levels of weakness that were seen in the offshore market in the aftermath of the election surprise.

He said this view was complimented by indications early Friday morning that forward contracts regained its composure after Tun Dr Mahathir Mohamad was sworn in as Prime Minister on Thursday.

On headline interest rates growth to be announced by BNM soon, Jameel said there was a distinct possibility that it would not be able to keep up with the overwhelming out-performance seen last year.

However, a headline growth number somewhere around the five per cent level will highlight key concerns of international investors that the domestic economy is still consistently performing far beyond the economic growth seen in the developed world, he added.

OANDA Head of Trading in Asia-Pacific Stephen Innes said as for the Monday’s foreign exchange market opening, locals would respect the implied one-month non-deliverable forwards, which was predicated on foreign money risk transfer expectations.

The resurgent greenback and higher US yields remain the biggest headwinds for the local sentiment and should keep investors on the defensive over the near to medium term, he told Bernama.

The financial markets were closed on Wednesday for the 14th General Election, as well as, on Thursday and Friday to observe special public holidays announced by Chief Secretary to the Government Tan Sri Dr Ali Hamsa over Pakatan Harapan’s win.

The ringgit traded higher against a basket of major currencies.

On a Tuesday-to-Friday basis, the local note eased against the greenback to 3.9480/9530 from 3.9390/9420 last week.

It increased against the Singapore dollar to 2.9498/9540 from 2.9523/9548, and declined against the yen to 3.6250/6299 from 3.6095/6132 previously.

The local note appreciated vis-a-vis the British pound to 5.3353/3437 from 5.3389/3446 and strengthened against the euro to 4.6898/6962 compared with 4.7103/7154 last Friday. –Bernama

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