THE ongoing uncertainties over China’s economic outlook will continue to influence the currency markets and drag the ringgit to trade in a tight range next week, an economist said.

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the local note would likely stay within a narrow range between 4.63 and 4.65 against the US dollar as investors would prefer the greenback in light of the heightened economic uncertainties.

He said market players would closely watch for the Chinese government policy response as the People’s Bank of China (PBOC) decides its loan prime rate on Monday.

“Consensus estimates showed that PBOC might cut another 15 basis points next week,” he said.

Kenanga Research, in a note, said growing pessimism over China’s recovery, stemming from its economic distress and lack of stimulus support might continue to weaken the yuan, subsequently pressuring the ringgit.

“However, PBOC’s stronger-than-expected fixing and continued intervention by the state-owned banks may limit the yuan’s depreciation,” it said.

On the home front, the Department of Statistics Malaysia yesterday said the country’s economy expanded by 2.9% in the second quarter of 2023 (Q2 2023), bringing the average growth for the first half of the year to 4.25%.

It said Malaysia’s economic growth moderated during the quarter, partly due to weaker external demand amid the global technology cycle, lower commodity production and high base effect from Q2 2022.

On a Friday-to-Friday basis, the ringgit was lower against the US dollar at 4.6465/6510 from 4.5865/5895 previously.

The local unit was also traded lower against other major currencies.

It fell against the British pound to 5.9131/9189 from 5.8230/8268 the previous Friday, slipped versus the euro to 5.0503/0552 from 5.0351/0384 and depreciated vis-a-vis the Japanese yen to 3.1926/1959 from 3.1712/1735.

Similarly, the ringgit was traded lower against its Asean peers.

The local unit eased against the Singapore dollar to 3.4228/4264 from 3.3967/3991 a week earlier and declined against the Indonesian rupiah to 303.9/304.2 from 301.3/301.6.

It was lower versus the Thai baht at 13.1331/1510 from 13.0737/0871 last Friday and weakened vis-a-vis the Philippine peso to 8.27/8.28 from 8.14/8.15. – Bernama, August 19, 2023.