KUALA LUMPUR: The ringgit is likely to trend skewed to the downside this week with trading forecast at between 4.69 and 4.72 against the US dollar, driven by the stronger- than-expected US inflation data in September, according to analysts.
SPI Asset Management managing partner Stephen Innes pointed out that the market would unlikely see much respite for the beleaguered ringgit against the stronger dollar after a sizzling hot US consumer price index or CPI reinforced the view that the Federal Reserve would keep hiking aggressively throughout the year.
“Political risk around the upcoming elections has also featured in the ringgit weakness all week, and it should continue to crescendo this week.
“But at the heart of the ringgit weakness is the global financial and economic system which is becoming increasingly fragile for investors, and there ultimately remains only one safe haven in the world and that is the US dollar,” he told Bernama.
Innes also noted that the break of 4.70 last Friday was ominous, and it might result in more weaknesses as underperforming equity and bond markets could lead to more outflows.
Meanwhile, UOB Kay Hian Wealth Advisors Sdn Bhd wealth research and advisory head Mohd Sedek Jantan opined that fundamentally, the ringgit was still in good shape and was expected to be less volatile than other Asian currencies.
“The latest economic data on distributive trade sales and the Industrial Production Index (IPI) released last week support our view on the ringgit,” he said.
Mohd Sedek pointed out that IPI growth accelerated to 13.6% year-on-year (y-o-y), the fastest in 15 months, driven by stronger growth in manufacturing output (up 14.9% y-o- y), which corresponded to better export performance.
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