THE ringgit is expected to trade in cautious mode with an upward bias against the US dollar next week ahead of a decision by the United States Federal Reserve (Fed) on its monetary policy.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said market conditions will hold in the lead-up to the Federal Open Market Committee (FOMC) midweek meeting.

He said following a 50 basis point (bps) interest rate hike by the European Central Bank this week, similar dynamics can be expected from the FOMC. 

“A 25bps hike seems to be on the cards next week. But beyond that, we shall see the Fed’s narrative, which could potentially explain the appreciation of the ringgit. 

“The prevailing market conditions are still highly fluid, whereby risk-off mode could easily emerge. If that happens, it could boost the US dollar,” he told Bernama. 

Afzanizam said the US dollar versus ringgit is likely to gyrate towards its immediate support level of 4.4652 next week.

The local currency ended the week higher against the US dollar following concerns over a potential banking crisis after two US banks landed in trouble.

On a week-on-week basis, the ringgit was stronger against the US dollar at 4.4850/4880 at yesterday’s close versus 4.5180/5220 a week earlier. 

The local note traded mostly lower against a basket of major currencies compared with a week earlier.

It fell against the British pound at 5.4390/4426 from 5.4148/4196 a week earlier and dropped against the Japanese yen to 3.3679/3704 from 3.3038/3070, but improved vis-a-vis the euro to 4.7743/7775 from 4.7823/7865 previously. 

The ringgit traded mixed against its Asean counterparts. 

The local note shrank versus the Singapore dollar to 3.3393/3418 from 3.3316/3351 in the previous week and depreciated against the Thai baht to 13.0987/1151 from 12.8894/9064.

It gained vis-a-vis the Indonesian rupiah to 292.20/292.60 from 292.30/292.80 a week earlier and remained unchanged against the Philippine peso at 8.19/8.20. – Bernama, March 18, 2023.