Ringgit expected to trade in narrow range vs greenback ahead of BNM's OPR decision

KUALA LUMPUR: The ringgit is set to have a limited fluctuation against the US dollar in the coming week as market participants focus on Bank Negara Malaysia's decision on the overnight policy rate (OPR) on November 5. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid suggested that a possible OPR increase next week might bolster the ringgit, as the central bank may consider normalizing the policy rate due to the country's outpacing economic growth.

According to him, the dollar-ringgit could fluctuate between RM4.05 and RM4.07 throughout the week. Kenanga Investment Bank Bhd stated that any escalation in the Middle East crisis could lead to higher oil prices and US Treasury (UST) term premium, which would diminish the decline of the 10-year yield below 5.00 per cent, thus reigniting demand for the US dollar.

Analysts anticipate investors to adopt a defensive stance during the vote, leaving the ringgit's gains exposed. They predict the ringgit to be volatile within the RM4.04-RM4.08 range next week, with their RM4.00 year-end target still attainable. On a Friday-to-Friday basis, the ringgit climbed against the greenback from 4.0835/0875 to 4.0555/0600. The local currency also appreciated against several other major currencies and regional currencies.