Cautious outlook on the Malaysian Ringgit next week

KUALA LUMPUR: The ringgit will likely trade in a cautious mode next week, with investors eyeing updates on the global economic performance.

Among the key events taking place next week are the Group of 20 (G20) Summit in Argentina, release of the China manufacturing purchasing manager’s index (PMI) and the oil price movement.

Stephen Innes, Asia-Pacific Head of Trading at Oanda in Singapore said the China manufacturing PMI, which is expected to soften in November, could be very harmful to regional equity sentiment.

“The local investors will continue to demystify the massive drop in energy prices which have both positive and negative effects on the Malaysian economy.

“But overall, the decline will be harmful to the large oil and gas constituents on the local exchange while falling pump prices will have a stimulatory effect on consumers,“ he told Bernama.

Innes, however, noted that despite an overly bearish ringgit sentiment in the market, much focus will revolve around the yuan, and its far-reaching implications on currency markets.

He noted that while the slippery oil prices would be a massive negative for the local note due to the negative impact on government coffers, there are nascent signs of a recovery in emerging market carry trades.

One of the highlights on the upcoming G20 meeting, which starts on Nov 30, he said, would be the meeting between China’s President Xi Jinping and US President Donald Trump in Buenos Aires to reconcile their trade dispute.

It was reported that the US is set to raise its tariffs to 25% on US$200 billion of Chinese imports on Jan 1, 2019 from 10% currently.

Innes projected that the ringgit will hover between 4.18 and 4.21 level next week, provided the global oil price improves, coupled with a positive outcome from the G20 Summit.

On a Friday-to-Friday basis, the local note weakened to 4.1920/1960 against the greenback from 4.1900/1940 recorded in the previous week.

However, against a basket of major currencies, the local note was traded lower.

The ringgit depreciated against the Singapore dollar to 3.0489/0530 from 3.0428/0462 and vis-a-vis the Japanese yen, it declined to 3.7150/7189 from 3.6946/6991.

The local currency decreased against the British pound to 5.3855/3927 from 5.3603/3671 and weakened against the euro to 4.7680/7730 from 4.7506/7568. — Bernama

The Sun Daily via Bernama

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes