Ringgit performance likely to be encouraging next week
KUALA LUMPUR: The ringgit’s performance is likely be encouraging with an upside bias against the US dollar next week as Bank Negara Malaysia reaffirms the local note’s steadiness, said RHB Research.
In a note Saturday, RHB Research said, the central bank has indicated that the ringgit has stabilised following its implementation of foreign exchange measures, including the requirement for exporters to convert 75 per cent of their export proceeds into ringgit.
“They acknowledged the US$17 billion (US$1 = RM4.28) short position in currency swap with local banks, but it is more for liquidity management.
“This position is expected to be eased gradually, on the back of export proceeds conversion and potential inflow of foreign capital going forward,” it said.
RHB Research said given that major central banks were increasingly vocal about tightening their monetary policies, the BNM may still need to use the swap position to continue managing the liquidity in the system.
“In this respect, we envisage the ringgit to trade in a range of RM4.20-4.40 against the US dollar for the next few months, before settling down at RM4.20 by year-end,” it said.
On a Friday-to-Friday basis, the ringgit was traded higher at 4.2820/2850 against the greenback from 4.2910/2940 last week. However, the local note was traded mostly lower against other major currencies, except the greenback.
It declined versus the Singapore dollar to 3.1375/1410 from 3.1210/1243 last week and weakened against the yen to 3.8362/8406 from 3.7886/7926 last Friday.
The local note fell against the British pound to 5.5692/5744 from 5.5624/5667 last week and depreciated against the euro to 4.9868/9916 from 4.8977/9016 previously. – BERNAMA
Bernama also reported:
Short-term rates are likely to remain steady next week with Bank Negara Malaysia expected to offer tenders to absorb excess funds from the system.
For the just-ended week, the overnight rate was quoted at 2.96 per cent, while the one-, two- and three-week rates stood at 3.02 per cent, 3.06 and 3.11 per cent, respectively.
The central bank intervened on a daily basis to mop up surplus liquidity by conducting range maturity auction tenders, Qard tenders, Commodity Murabahah Programmes, reverse repo tenders, and conventional money market tenders.
It also called for Qard money market tenders and conventional money market tenders.
The total liquidity surplus for the week just-ended declined to RM28.42 billion from RM39.1 billion in the conventional system on Friday, while in the Islamic system, it shed to RM10.92 billion from RM12.99 billion.
The benchmark three-month interbank rate stood at 3.43 per cent. – Bernama