Ringgit Expected to Trade in Tight Range Against US Dollar Next Week

The ringgit is expected to trade in a tight range against the US dollar next week due to cautious investor sentiment ahead of key monetary policy decisions by the Federal Reserve and Bank of Japan. Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, said both central banks are likely to raise their respective policy rates by 25 basis points. The focus will be on the Fed's latest economic projections for GDP growth, inflation, unemployment rate, and federal funds rate.

Expectations of a rate hike by the US Fed have supported the greenback in the foreign exchange market, according to Mohd Afzanizam. This has led to a tight range of between RM4.06 and RM4.08 for the ringgit against the US dollar next week. External developments, including the rise in crude oil prices due to the intensifying US-Israel-Iran conflict, will also influence market sentiment.

The escalation of tensions has pushed Brent crude oil prices higher to around US$104.64 per barrel. On a Friday-to-Friday basis, the ringgit weakened against the greenback to 4.0685/0725 from 4.0425/0465 last week. It also traded lower against major currencies such as the British pound, Japanese yen, and euro.