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KUALA LUMPUR, Oct 31 (Bernama): Bank Negara Malaysia’s (BNM) policy rate decision on Tuesday (Nov 3) and 2021 budget presentation on Friday (Nov 6) will be catalysts for the ringgit against the US dollar and other major currencies. next week.
The overnight policy rate (OPR) is currently at 1.75 percent after the central bank cut the key interest rate by 100 cumulative basis points (bps) during meetings of the Monetary Policy Committee this year.
FTXM market analyst Han Tan further said that internal political uncertainties also added another layer of risk that could affect the performance of the local currency.
However, he noted that the US dollar / ringgit movement would still be driven primarily by external factors.
“For next week, an increase in risk aversion could cause the dollar / ringgit to test the resistance level of 4.1707, with stronger resistance around the psychological level of 4.20.
“However, a sharp fall in the US dollar could put the 4.14 level back into focus for the currency pair, while a path to the psychological level of 4.10 cannot be ruled out if the dollar capitulates with a decisive victory from Joe. Biden or surprisingly moderate comments from the US Federal Reserve, ”he said.
The 2020 United States (USA) presidential election is scheduled for November 3. It will be the 59th quadrennial presidential election.
On the same note, Axi’s chief global market strategist Stephen Innes said that Biden’s victory in the US presidential election would be viewed more favorably than a Donald Trump victory from an Asian perspective.
“My view is that the US dollar will eventually sell off on any of the results, but traders need to respect the initial knee-jerk reaction of the market, so I think this is preventing traders from taking on more Asian currency risk (FX).
“The Chinese yuan could bounce on election day and it could be difficult to get stuck on the wrong side of trade,” Innes said.
He noted that many traders would prefer to have the dust from the US elections settle before buying back the ringgit, as the issue of a contested election remained a primary concern.
“The positioning is much lighter, so the ringgit could make a break to the upside next week, provided COVID-19 counts start to fall locally. The cautious range next week for the ringgit against the US dollar is between 4.14 – 4.17, “he added. .
During the week, positive exports from Malaysia in September helped the ringgit reclaim the title as Asia’s best performing currency for the day.
Nonetheless, the US dollar index rose more than one percent as global risk appetite deteriorated amid a resurgence of COVID-19 cases in major economies, while hopes for a fiscal stimulus deal America before the elections began to fade.
From Friday to Friday, the ringgit declined against the US dollar to 4.1530 / 1570 from 4.1500 / 1600 in the previous week.
The local currency was mostly higher against other major currencies.
It appreciated against the Singapore dollar to 3.0427 / 0468 from 3.0593 / 0678 on Friday last week, but was down against the yen to 3.9757 / 9814 from 3.9664 / 9771.
The ringgit strengthened against the British pound to 5.3806 / 3866 from 5.4286 / 4434 a week earlier and traded firmer against the euro at 4.8470 / 8529 from 4.9153 / 9288 previously. – Bernama
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