BERNAMA – The ringgit is expected to trend higher this week following the positive effects of China’s latest domestic stimulus and a pivot in the United States (US) Federal Reserve’s (Fed) policy stance, said SPI Asset Management managing partner Stephen Innes.
He said the ringgit should rally more on the ‘Great Monetary Pivot of 2024’, especially when combined with China’s recent move to infuse a record amount of cash into its economy.
“China’s moves are aligned with a renewed commitment to supporting its property sector, delivering a more potent stimulus message to investors disillusioned with previous fragmented approaches,” he told Bernama.
Innes said that as China is Malaysia’s biggest export destination, any stimulation to its domestic economy would, in theory, increase Malaysia’s exports.
He said the degree to which regional investors embraced China’s stimulus would help drive the ringgit’s performance next week.
“However, the ringgit continues to wallow in domestic political and external geopolitical woes. Geopolitical factors, particularly US-China relations, could impede investor confidence,” he added. Earlier in the week, the Fed surprised the market by endorsing 75 basis points of interest rate cuts in 2024, and the Fed’s dovish pivot was given the moniker “Great Monetary Pivot of 2024”.
Meanwhile, the US Federal Open Market Committee (FOMC) has opted to keep the FFR steady at 5.25-5.50 per cent following its latest meeting.
Bank Muamalat Malaysia Chief Economist Mohd Afzanizam Abdul Rashid believes the ringgit might attempt to break the immediate support of RM4.6611 next week as the Fed is expected to cut interest rates next year.
He said the main focus now is on the Japanese yen as the Bank of Japan (BOJ) is expected to ditch its ultra-loose monetary policy sometime in January next year, based on a poll.
The economist said that since November 15, the ringgit has depreciated against the yen by 6.4 per cent to MYR3.2868 per JPY100.
“The BOJ monetary policy meeting on December 19 will be closely monitored as market participants are searching for clues to the possible removal of monetary policy accommodation.”
