Market Worries Over US Interest Rates Could Halt Ringgit’s Uptrend Next Week | Money

The ringgit had a mixed trend against the greenback throughout the trading week. — Photo by Hari Anggara

KUALA LUMPUR, Jan. 22 – The ringgit is expected to linger at the current level of 4.18 against the US dollar as investors weigh on the outcome of the US Federal Open Market Committee (FOMC) meeting next week .

The main underlying issue continues to revolve around a possible early rise in U.S. interest rates, with a large number of Federal Reserve officials favoring the removal of monetary policy easing.

As such, the US FOMC meeting on January 25-26 will be the main focus next week, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Bernama.

That said, he said the Bank Negara Malaysia (BNM) Monetary Policy Committee (MPC) stance on economic conditions may well lead to an upward trend for the ringgit throughout this year.

“Judging from the MPC meeting (January 20), BNM is comfortable with the current state of the economy. Should it continue like this, there could be a chance that the overnight policy rate day (OPR) be raised at some point this year,” he noted.

At the first MPC meeting for 2022, the central bank kept the OPR unchanged at 1.75%, with a likely increase of 25 basis points in the second half of 2022.

BNM’s continued positive tone and the latest inflation data helped ringgit trade firm up on Thursday and Friday.

He said the December consumer price index (CPI) for December 2021 was flat at 3.2%, down from 3.3% in November 2021.

Overseas, the sharp rise in US Treasury yields, the sell-off in equities and the drop in China’s key interest rate were among the main factors that affected the foreign exchange market this week.

The ringgit had a mixed trend against the greenback throughout the trading week.

It ended the week lower at 4.1840/1870 against the US dollar from 4.1765/1795 at the previous Friday’s close.

The local currency also traded lower against other major currencies from Friday to Friday.

It depreciated against the Singapore dollar to 3.1096/1121 from 3.1045/1070 the previous Friday and weakened against the Japanese yen to 3.6715/6741 from 3.6675/6704.

However, the ringgit gained against the euro at 4.7434/7468 from 4.7846/7880 a week earlier and strengthened against the pound to 5.6764/6805 from 5.7339/7380 previously. — Bernama

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