KUALA LUMPUR, Aug 21 (Bernama) — The ringgit is expected to see volatile trading next week after hitting a 13-year high of RM3.1260 against the greenback on Thursday following the easing of regulations on ringgit transactions for trade settlement by Bank Negara Malaysia (BNM).
RAM Holdings Bhd economist, Jason Fong, said the rating agency expected to see volatile trading in the ringgit next week on profit-taking following the appreciation recently.
“However, the underlying fundamentals, especially with regard to US-Malaysia interest rate differentials and diverging pace of growth this year, are expected to remain and will support the ringgit’s strength for the rest of the year,” he told Bernama.
Meanwhile, Hong Leong Bank said the ringgit was expected to close stronger this year at 3.05 versus the greenback as the relaxation of forex rules would support greater demand for the local currency and enhance efficiency in international trade and hence economic growth.
The local unit is expected to trade between 3.1100-3.1600 next week, the bank said in its weekly economic research note.
On Thursday, the ringgit hit its highest level against the US dollar since the Asian financial crisis.
Analysts said it was the increased flexibility given to corporate hedging activity that was the biggest driver of the ringgit’s strength, as speculation mounted that BNM was moving towards allowing the currency to trade freely offshore.
For the week just-ended, the ringgit was firmer at 3.1360/1410 against the US dollar compared with the previous week’s closing of 3.1660/1690.
It rose against the Singapore dollar to 2.3122/3176 from 2.3288/3331 last Friday and the yen to 3.6721/6784 from 3.6874/6913 previously.
The ringgit strengthened against the British pound to 4.8674/8770 from 4.9532/9589 last Friday and against the euro to 4.0031/0098 from 4.0708/0757 previously.
