KUALA LUMPUR: The ringgit is expected to continue its downtrend next week and may stabilise at the 4.40 level against the US dollar on mounting concerns over a possible interest rate hike by the US Federal Reserve (Fed) in December.

Affin Hwang Investment Bank Vice-President/Retail Research Head Datuk Dr Nazri Khan Adam Khan said the US dollar had strengthened following upbeat US economic data, thus inciting the case for a higher interest rate.

“Following the Fed’s meeting yesterday, it is certain now that with the strengthening of the dollar, interest rate will likely increase next month and this will pull ‘hot money’ out of ringgit-denominated bonds into US dollar-denominated bonds,” he told Bernama.

The Fed’s statement on raising interest rates “relatively soon” had encouraged investors to turn to the dollar, he added.

Nazri Khan also said that other bearish sentiment like declining global oil prices would likely dampen the local note next week.

Oil prices fell on Friday as the firmer US dollar provided some renewed hope that the Organisation of the Petroleum Exporting Countries might finally agree to production cuts.

Brent crude oil fell 32 cents to US$46.17 per barrel, while US West Texas Intermediate crude oil was down 47 cents at US$44.95 per barrel.

Bank Negara Malaysia (BNM) has taken measures to stem the volatility in the foreign exchange market.

BNM assistant governor Adnan Zaylani Mohamad Zahid also assured that Malaysia was in a far better position to defend against speculation on the ringgit, having built up its coffers since the 1997/1998 Asian financial crisis.

Although foreigners held more than half of the outstanding Malaysian Government Securities, some 60 to 70 per cent consisted of long-term investors such as pension funds and other central banks, he said.

For the week just-ended, the ringgit was lower at 4.4140/4190 against the greenback from 4.2800/2900 last Friday, but ended mixed against other major currencies.

The ringgit appreciated against the yen to 3.9874/9948 last Friday from 4.0199/0308 but declined against the Singapore dollar to 3.0962/0008 from 3.0372/0458 last week.

The local unit fell to 4.6780/6837 against the euro from last Friday’s 4.6519/6632 but weakened against the British pound to 5.4734/4813 from 5.4168/4299 previously. --Bernama

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Ringgit , downtrend , Bank Negara Malaysia (BNM)

Source:
http://www.nst.com.my/news/2016/11/189977/ringgit-continue-downtrend-next-week