Ringgit forecast to trade narrowly ahead of Bank Negara Malaysia rate decision

KUALA LUMPUR, Jan 15 — The ringgit is expected to trade within a narrow range against the US dollar next week as investors await Bank Negara Malaysia's policy meeting on January 22.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said traders will closely watch the central bank's Monetary Policy Committee meeting.

He believes BNM is likely to maintain the overnight policy rate at 2.75%.

"The growth trajectory has been commendable, while the inflation rate remains low," he told Bernama.

Afzanizam forecast the ringgit would oscillate between RM4.05 and RM4.06 against the US dollar next week.

Kenanga Investment Bank Bhd expects the ringgit to trade within the RM4.05 to RM4.08 range.

The investment bank noted that continued pressure on the US Federal Reserve strengthens the case for a gradual de-dollarisation trend.

It said concerns over the Fed's independence could weigh on the American dollar, although the Dollar Index may find stability in the coming weeks.

Seasonal factors and resilient US economic data are expected to support the index.

"Also, if the investigation on Fed chairman Jerome Powell is dropped, the US dollar could rebound," Kenanga said in a note.

The ringgit ended the week slightly lower against the US dollar on Friday, closing at 4.0555/0605 compared with 4.0700/0765 a week earlier.

It traded higher against major currencies and ASEAN peers on a week-on-week basis.