Ringgit Seen Trading at RM4.08-RM4.10 Ahead of Fed Decision

The Malaysian ringgit is expected to trade within a specific range against the US dollar this week due to upcoming events. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the focus will be on the interest rate decision by the US Federal Reserve (Fed) and the Negeri Sembilan state election on Aug 1.

Most economists are expecting the US interest rates to remain at 3.5-3.75 per cent, according to Dr Afzanizam. Market participants will focus on the Federal Open Market Committee (FOMC) statement, especially how committee members assess inflation dynamics going forward. This is due to the recent rise in crude oil prices.

Crude oil prices have surged over US$100 per barrel from US$71.57 on July 1, with every US$1 increase generating an additional RM300 million in government revenue. The market consensus is that peace will eventually prevail and the US dollar will ease, but the timing is difficult to predict.

Stephen Innes, managing partner of SPI Asset Management, expects crude oil prices to be the key driver of the ringgit next week. He also noted that Malaysia's position as an energy exporter sets it apart from its regional peers.