Global oil price movements and lack of US stimulus seen as factors on foreign exchange market.
KUALA LUMPUR: The ringgit is likely to trade lower against the US dollar next week because of continued global weakness and lack of stimulus from the US Federal Reserve to support the market, analysts said.
“The weakness in the global economy will be pressured by continued uncertainty amid sliding oil prices coupled with the over exposure of the European banking sector to oil related bonds,” said Hwang Investment Bank head of retail research Dr Nazri Khan Adam Khan.
He said that although the chairman of the Federal Reserve had acknowledged concerns over tightening financial conditions and the risks from recent market turmoil, the market showed greater concern over advanced economies that remain stuck in low growth.
Nazri forecast that the ringgit was likely to hover around 4.100 to the US dollar next week with the market expecting higher global crude oil prices, and improved risk appetite for the Malaysian currency.
Last week, oil prices rose almost five per cent after talk of exporters cutting output. “If global oil prices continue to pick up, it will boost the ringgit to the 3.95 level,” Nazri added.
Last week, the international benchmark Brent crude was traded at US$31.43 per barrel, up US$1.37 or 4.56 per cent. The ringgit eased to 4.1650/1750 from 4.1520/1620 against the US dollar last week because of uncertainty in the global economy and the movement of crude oil prices.
The foreign exchange market was closed on February 8-9 for the Chinese New Year celebration.
Last Friday the ringgit fell against the Singapore dollar to 2.9831/9918 from 2.9672/9754; against the yen to 3.6979/6081 from 3.5514/5612; and the euro to 4.6973/6102 from 4.6469/6598; but it rose against the British pound to 6.0422/0583 from 6.0312/0478. – BERNAMA