KUALA LUMPUR, Aug 30 — The ringgit is expected to trade sideways with an upside bias next week, reflecting a cautious but optimistic market sentiment, ahead of the Bank Negara Malaysia (BNM) Monetary Policy Committee meeting scheduled on September 4.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said BNM is likely to maintain the overnight policy rate (OPR) at 2.75 per cent.
“BNM has delivered a pre-emptive cut in OPR, and I suppose the degree of monetary policy accommodation is sufficient to support the growth.
“More importantly, markets would want to see the latest assessment by the central bank with regard to the current state of the economy and its prospects,” he told Bernama.
Globally, market participants await the United States (US) employment data.
Commenting on the latest US Personal Consumption Expenditures (PCE) data, Afzanizam said PCE and core PCE inflation for July came in within expectations.
“The core PCE rose 2.9 per cent as expected, but higher than 2.8 per cent in the previous month. In that sense, the markets acknowledge the fact that inflation is going to be at an elevated level due to tariffs,” he said.
However, it remains to be seen whether this will be persistent or transitory.
In the context of weakening growth, Afzanizam noted that it appears that inflation is likely to be momentary as demand is expected to be weakened.
“On that note, the ringgit is likely to oscillate between RM4.21 and RM4.23 (to the dollar),” he said.
Meanwhile, UOB Kay Hian Wealth Advisors Sdn Bhd’s head of investment research Mohd Sedek Jantan also expects BNM to maintain the OPR at 2.75 per cent during the September meeting, adopting a wait-and-see stance following the pre-emptive 25-basis-point cut in July.
Besides, optimism is also building around a potential US Federal Reserve (US Fed) rate cut in September.
“The coming week will be dominated by Friday’s US non-farm payrolls report, which will serve as a crucial test for US Fed policy.
“With the US Fed’s dual mandate of maximum employment and price stability, labour market dynamics have become increasingly central, particularly as policymakers appear more confident that any tariff-related inflationary pressures will prove modest or temporary,” he said.
On a Friday-to-Friday basis, the ringgit ended the week lower against the greenback, closing at 4.2230/2275 versus 4.2245/2295 previously.
The local note traded lower against a basket of major currencies.
The ringgit depreciated vis-à-vis the Japanese yen to 2.8708/8741 from 2.8408/8443 in the previous week, fell versus the euro to 4.9291/9343 from 4.8996/9054, and weakened against the British pound to 5.6833/6894 from 5.6659/6726.
The ringgit performed mixed against Asean currencies.
The local note went down against the Singapore dollar to 3.2859/2899 from 3.2763/2805 at the end of last week and slid versus the Thai baht to 13.0327/0519 from 12.9387/9592.
However, it gained versus the Indonesian rupiah to 255.9/256.3 from 258.3/258.7 in the preceding week and appreciated against the Philippine peso to 7.39/7.40 from 7.42/7.43.
