Kuala Lumpur: The ringgit is anticipated to trade within a narrow range in the coming week as investors exercise caution due to ongoing global inflation concerns, an analyst has stated. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid indicated that the local currency is expected to fluctuate between 4.22 and 4.24 against the US dollar.
According to BERNAMA News Agency, market attention is focused on the impending Federal Open Market Committee (FOMC) meeting scheduled for June 17-18. Dr Mohd Afzanizam emphasized that the primary focus would be on the quarterly forecast by the Federal Reserve’s staff, particularly regarding the Fed Funds Rate outlook for the remainder of the year.
In addition to the Fed, several other central banks are set to convene next week, including the Bank of England, Bank of Japan, and the People’s Bank of China. Central banks in the ASEAN region, such as the Bank of Indonesia and Bangko Sentral ng Pilipinas, are also slated to hold meetings during this period. Dr Mohd Afzanizam noted that global interest rates are generally trending downward as global growth prospects face challenges due to tariff shocks.
Meanwhile, geopolitical tensions have impacted the financial markets, with Israel’s strikes on Iran’s nuclear facilities causing Brent crude prices to rise sharply to a high of US$78.22 per barrel before retreating to US$73.56 per barrel. The US Dollar Index increased by 0.31 percent to 98.228 points. Dr Mohd Afzanizam remarked that geopolitics has taken center stage, currently benefiting the US dollar.
Reports suggest that a direct military conflict between Israel and Iran could significantly appreciate the US dollar. The Fed’s response to these dynamics, especially concerning interest rates, will be pivotal in shaping the US dollar’s trajectory shortly.
For the week just ended, the ringgit relinquished its earlier gains as escalating geopolitical concerns spurred demand for the safe-haven US dollar. The ringgit closed the week lower against the greenback, ending at 4.2435/2480 on Friday from 4.2270/2360 a week earlier.
The local currency also traded lower against a basket of major currencies. It fell vis- -vis the Japanese yen to 2.9448/9482 from 2.9324/9390 at Friday’s close, slipped against the British pound to 5.7482/7543 from 5.7212/7334 previously, and depreciated versus the euro to 4.8906/8958 from 4.8268/8371 at the end of last week.
Against ASEAN currencies, the ringgit mostly declined. It weakened against the Singapore dollar to 3.3077/3118 on Friday from 3.2862/2934 in the previous week, slid versus the Thai baht to 13.0807/1018 from 12.9599/9947 last week, and slightly weakened versus the Indonesian rupiah to 260.2/260.6 from 259.5/260.2 previously. Meanwhile, the ringgit remained unchanged against the Philippine peso at 7.55/7.56.