Ringgit, market currencies to trade in volatile mode due to Covid-19 fears

The ringgit is expected to trade in a volatile mode in line with other emerging market currencies as the global economy continues to be under pressure as Covid-19 fears continue to grip global markets.

FXTM market analyst Han Tan said global investors will be looking out for further signs of the economic carnage caused by Covid-19, while awaiting data on purchasing managers' index (PMI), retail spending and external trade figures expected to be announced next week.

"Bank Negara’s revised full-year Gross Domestic Product (GDP) forecast will be closely watched, as investors have grown wary about Covid-19’s impact on the domestic and global economy, given that the movement control order has disrupted economic activity across the country.

"Malaysia’s February consumer price index data is expected to come in at 1.5 per cent, which points to inflationary pressures remaining manageable. 

"The fiscal and monetary support measures that have been rolled out by policymakers should eventually help buffer Malaysia’s economic fundamentals, once the coronavirus outbreak has peaked and the market’s erratic behaviour subsides," he said.

For the week ahead, he said that the continued easing of the US dollar-funding stress could push the US dollar/Malaysian ringgit closer back towards the 4.30 psychological level.

"However, should the dash for the greenback and risk aversion continue unabated, the ringgit could breach the 4.40 level versus the greenback again, revisiting levels not seen since the first quarter of 2017," he said.

To date, Malaysia has recorded a staggering 1,030 Covid-19 cases with two deaths, making it the third-highest in Asia.

On the oil front, benchmark Brent crude was recorded at US$34.52 per barrel before sliding to US$28 per barrel yesterday.

It rebounded on Friday to US$31.17 at the time of writing due to production disruption in Iran caused by Covid-19, but is expected to be short-lived.

For the week just ended, the ringgit ended lower against the US dollar at 4.3947/4012 from 4.2750/2800 on the Friday of the previous week.

On Thursday, it breached the 4.40 benchmark before retreating slightly backed by higher oil prices.

On a Friday-to-Friday basis, the local currency rose broadly against a basket of currencies.

It was slightly higher against the Singapore dollar at 3.0303/0369 from 3.0360/0406 a week earlier, and climbed to 3.9811/9898 from 4.0228/0279 versus the Japanese yen.

The local note inched up against the euro to 4.7204/7303 from 4.7730/7790, and rose vis-a-vis the British pound to 5.1926/2042 from 5.3822/3902 previously. -Bernama