BERNAMA – The ringgit is anticipated to move on a continued bullish bias this week, trading at 4.1875 to 4.2025 against the US dollar, said an analyst.
SPI Asset Management managing director Stephen Innes said massive moves on the ringgit in the past week reminded markets just how deeply undervalued the local unit was, held back by higher United States (US) short-term rates.
“It is as if the jumbo Federal Reserve (Fed) cut opened the bullish floodgates, sending the ringgit surging. But, of course, there’s always more beneath the surface.
“The Fed’s jumbo rate cut is a game-changer, boosting local foreign exchange (FX) markets and lighting a fire under the local stock market, drawing in foreign inflows in a virtuous cycle for a stronger ringgit,” Innes told Bernama.
He further said while the US economic data has held up for now, he expects that it (the US economy) would eventually soften, leading to an even more aggressive repricing of the US yield curve lower, which would benefit the ringgit even further.
“In this environment, any US dollar strength will likely be short-lived, quickly snuffed out by the prospect of more Fed cuts. But given how far and fast we have come, I wouldn’t be surprised to see some consolidation next week, around 4.20. I am expecting a range of 4.1875 to 4.2025, with a continued bullish bias,” said Innes.
Meanwhile, Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour said besides the US rate cut, Malaysia’s positive economic outlook and structural reforms were also propelling the ringgit’s rise.
