Bursa Malaysia likely to trend lower next week amid cautious market sentiment

KUALA LUMPUR: The Malaysian ringgit is expected to trade range-bound with a downward bias against the US dollar next week as the greenback continues to gain support from the Federal Reserve (Fed) hawkish stance on the United States (US) interest rate, an analyst said.

SPI Asset Management managing director Stephen Innes said the dollar will remain strong into October unless the US economic data, particularly the jobs and sales data, slides.

“The market will get no joy from the Fed this year as it appears they will be resolute on hawkish view. That said traders have been buying dollar for two months straight so they might come up for air and take a break into month end, when we get the usual onslaught of US activity data,” he told Bernama.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid shared that Malaysia’s Consumer Price Index for August came in at two per cent year-on-year on Friday, which is aligned with the consensus estimates.

Clearly, the disinflationary trend has become apparent as the inflation rate has come down from as high as 4.7 per cent in August 2022, and in that sense, the overnight policy rate hike by 125 basis points since May last year has started to take its intended effect to the inflation rate, he viewed.

“All in all, markets remained anxious about the prospects for higher rates in the US. The latest forecast by the Fed showed that the US central bank is likely to stick to the higher for longer narratives, which again will be dollar-positive.

“In that sense, the ringgit would linger around RM4.67 to RM4.69 versus the greenback next week,” he added.

For the week just ended, Hong Leong Research said in a note that the US dollar rose for a third straight week, advancing by 0.2 per cent week-on-week against the ringgit.

Against the rest of the G10 universe and major Asian peers, the ringgit was also mostly higher.

On a Friday-to-Friday basis, the ringgit weakened against the US dollar at 4.6865/6920 from 4.6815/6845 a week earlier.

The local unit, however, traded higher against other major currencies.

It appreciated against the British pound to 5.7372/7439 from 5.8196/8233 the previous Friday, rose versus the euro to 4.9860/9918 from 4.9919/9951, and was higher vis-a-vis the Japanese yen to 3.1593/1632 from 3.1670/1693 previously.

The ringgit traded mostly higher against its Asean peers.

The local unit improved against the Singapore dollar to 3.4313/4359 from 3.4350/4374 a week earlier and strengthened against the Thai baht at 13.0119/0322 from 13.0681/0812 last Friday.

It was marginally better versus the Indonesian rupiah to 304.7/305.3 from 304.8/305.2 last week but eased vis-a-vis the Philippine peso to 8.25/8.26 from 8.24/8.25. – Bernama