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KUALA LUMPUR (Dec 5): The ringgit is expected to continue its bullish momentum and trade between 4.0550 and 4.0750 against the US dollar next week due to a better appetite for the local currency supported by rising oil prices, said an analyst.
Axi’s chief global market strategist Stephen Innes said oil prices soared when the production decision meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC +) was big news for the ringgit due to because Malaysia is a net exporter of crude oil and petroleum products.
“However, the market has become a bit cautious bullish on Monday’s Brexit decision, but I suspect that once the hurdles have been cleared, we could see the ringgit test the 4.05 level next week if oil prices they stand firm, “he told Bernama.
Meanwhile, FXTM market analyst Han Tan said the ringgit was among Asia’s winners against the US dollar as the Malaysian currency closed a sixth consecutive weekly advance this week.
“Emerging market currencies have benefited from the risk sentiment that has permeated global financial markets, as the world’s population embarks on its journey towards Covid-19 immunity.
“The recent OPEC + deal also helped drive up the price of oil, with Brent futures hitting a new nine-month high while cushioning support surrounding commodity-linked currencies, including the ringgit,” he said .
Tan said risk-taking activities may also be dampened by the expected approval of the Food and Drug Administration for the Pfizer vaccine, which would likely help the prospects for economic recovery in the United States.
A better-than-expected printing of China’s November foreign trade figures on Monday could also bolster sentiment around Asian assets, he said.
“As long as risk sentiment remains unflappable, it is reasonable to expect the ringgit to make further inroads against the US dollar, with 4.05 being the next key marker.
“However, if the existing risk market narrative were derailed, the ringgit could quickly recede to 4.10,” Tan said.
From Friday to Friday, the ringgit was widely higher against the US dollar at 4.0580 / 0620 versus 4.0670 / 0710 in the previous week.
Meanwhile, the ringgit was mostly trading lower against other major currencies.
It fell against the Singapore dollar to 3.0461 / 0498 on Friday from 3.0380 / 0431 a week earlier, fell against the British pound to 5.4698 / 4772 from 5.4319 / 4389 and depreciated against the euro to 4.9366 / 9430 from 4.8479 / 8543.
However, the local currency soared against the Japanese yen to 3.9023 / 9080 from 3.9083 / 9133 on Friday of last week.
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