KUALA LUMPUR: China’s continuing reopening narrative and the improved domestic economic sentiment, due to the decision to maintain the overnight policy rate (OPR) at 2.75 per cent, will keep the ringgit supported next week, a dealer said.

SPI Asset Management managing director Stephen Innes said China is the largest export market for most regional economies and positive news from the mainland should significantly improve the trade outlook.

“I expect the US dollar-ringgit exchange rate to be between 4.2650 and 4.2950 next week and I upgrade my year-end call for the currency’s rate to the 4.10-level from the current expectation of 4.20.

“I might revise it higher to the 4.00-level depending on China’s consumption post-pandemic and the property market progress after the Chinese New Year,” he told Bernama.

He emphasised that Malaysia would be a big beneficiary since a big percentage of Malaysia’s exports end up in China, and this would definitely support the local currency.

On the domestic front, Innes reckons that the political risk premium built into the currency since 2018 is now evaporating, and with Malaysian exporters reducing greenback holdings, the ringgit is set to go higher.

“So for next week, exporters may cut down on the US dollar following Philadelphia Federal Reserve president Patrick Harker’s statement for the US central bank to move to a slower pace of interest rate rise,” he said.

The ringgit ended the week mostly higher as market sentiment improved due to domestic and global factors.

On a week-on-week basis, the ringgit was stronger against the US dollar at 4.2830/2875 on Friday from 4.3325/3375 a week earlier.

The local note also strengthened against a basket of major currencies versus a week earlier.

It was higher against the British pound at 5.2861/2916 from 5.2973/3035, the euro at 4.6393/6442 from 4.6986/7040, the Japanese yen at 3.3073/3111 from 3.3703/3744 and the Singapore dollar at 3.2386/2425 from 3.2782/2825. - Bernama

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