Home Forex Malaysian currency expected to trade cautiously next week

Malaysian currency expected to trade cautiously next week

by Jonathan Adams
Malaysian currency

Throughout the week, the ringgit was traded mostly higher on the back of the announcement of the Overnight Policy Rate (OPR) by Bank Negara Malaysia (BNM) and higher oil prices

The Malaysian currency (ringgit) is expected to trade in a cautious mode against the US dollar next week as investors monitor the spread of the Covid-19 pandemic as well as the movement of the oil market, said an analyst.

AxiCorp chief global market strategist Stephen Innes said the domestic unit is likely to hit the 4.25-level against the greenback should there be a decline in the United States’ (US) Covid-19 infection cases.

Officials across the US reported more than 59,000 cases on Thursday, setting a single-day record for the sixth time in 10 days, driven largely by states in the South and the West that were among the first to ease restrictions established during the virus’s initial wave in the spring.

Throughout the week, the ringgit was traded mostly higher this week on the back of the announcement of the Overnight Policy Rate (OPR) by Bank Negara Malaysia (BNM) and higher oil prices.

On July 7, BNM reduced the OPR by another 25 basis points to 1.75 per cent, a record low since the floor was set in 2004.

The OPR cut was due to the severe impact of Covid-19 on the global economy, and was the fourth this year totalling 125 basis points since the beginning of the year.

BNM’s Monetary Policy Committee also decided to have the ceiling and floor rates of the corridor of the OPR correspondingly reduced to 2.00 per cent and 1.50 per cent, respectively.

On a weekly performance, the ringgit ended Friday stronger against the greenback at 4.2650/2690 from 4.2840/2900 recorded a week earlier.

The local currency also increased against the Singapore dollar to 3.0648/0684 from 3.0718/0766, but fell versus the Japanese yen to 3.9931/9979 from 3.9855/9918.

The ringgit eased against the British pound to 5.3773/3845 from 5.3332/3423 on the previous Friday and declined vis-a-vis the euro to 4.8152/8210 from 4.8101/8185 previously.

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