Ringgit may strengthen further next week as investors focus on vaccination

The local currency ended the week firmer against the greenback as Moody’s Investors Service’s affirmation of Malaysia’s local and foreign currency long-term issuer ratings at A3, with a stable outlook, helped boost risk appetite in the market. — Bernama pic

KUALA LUMPUR, Jan 30 — The ringgit is expected to further appreciate against the US dollar next week with investors keeping their focus on the progress of Covid-19 vaccination.

“The ringgit could appreciate further to reach RM4.03 per US dollar next week if there are positive developments regarding the vaccine rollout.

“Otherwise, the extension of the movement control order should prevent appreciation and perhaps lead to a weakening,” Bank Islam Malaysia Bhd economist Adam Mohamed Rahim told Bernama.

Malaysia’s Covid-19 vaccination programme will start in February, with a testing capacity of 150,000 shots a day being targeted by the middle of the year.

Prime Minister Tan Sri Muhyiddin Yassin said on Jan 11 that Malaysia was expected to receive the Pfizer vaccine under the first phase by end-February.

On another development, Adam said the progress of United States (US) President Joe Biden’s proposed US$1.9 trillion (RM7.6 trillion) economic relief package would be closely monitored next week, as it could help lift sentiment towards the emerging currencies, including the ringgit.

“It will definitely influence sentiment in the local market as a stimulus could boost consumption and demand for goods outside of the US and, later on, positively affect exports,” he said.

For this week, the ringgit started off on a weak note due to the extension of the second movement control order (MCO 2.0), weaker crude oil prices, the rising number of Covid-19 cases globally, and delayed vaccine rollouts.

The currency rebounded on Wednesday following gains in crude oil prices as well as the bullish global economic outlook by the International Monetary Fund.

The local currency ended the week firmer against the greenback as Moody’s Investors Service’s affirmation of Malaysia’s local and foreign currency long-term issuer ratings at A3, with a stable outlook, helped boost risk appetite in the market.

On a Friday-to-Friday basis, the ringgit was higher against the US dollar at 4.0400/0450 versus 4.0415/0445 in the previous week.

The local note also appreciated against the Singapore dollar to 3.0369/0416 from 3.0451/0485 a week earlier and strengthened against the yen to 3.8524/8575 from 3.8984/8021.

The ringgit rose vis-a-vis the British pound to 5.5207/5291 from 5.5231/5288 a week earlier and was firmer against the euro to 4.8945/9021 from 4.9197/9246 previously.  —  Bernama

Source: Malay Mail