Kuala lumpur: The ringgit is anticipated to trade sideways with an upside bias in the coming week, reflecting a cautious yet optimistic market sentiment ahead of the Bank Negara Malaysia (BNM) Monetary Policy Committee meeting scheduled for September 4, an economist stated.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd's chief economist, Dr. Mohd Afzanizam Abdul Rashid, predicted that BNM is likely to maintain the overnight policy rate (OPR) at 2.75%. He noted that BNM has previously implemented a pre-emptive cut in the OPR, which he believes is sufficient to support economic growth. The markets are keen to see the central bank's latest assessment regarding the current state and future prospects of the economy.
Globally, market participants are awaiting the United States (US) employment data. Commenting on the latest US Personal Consumption Expenditures (PCE) data, Dr. Mohd Afzanizam stated that both PCE and core PCE inflation for July met expectations. The core PCE rose by 2.9%, slightly higher than the previous month's 2.8%. While acknowledging that inflation is likely to remain elevated due to tariffs, he indicated that it remains uncertain whether this trend will be persistent or transitory. In light of weakening growth, he suggested that inflation might be temporary as demand weakens. Consequently, he expects the ringgit to oscillate between RM4.21 and RM4.23 against the dollar.
Meanwhile, UOB Kay Hian Wealth Advisors Sdn Bhd's head of investment research, Mohd Sedek Jantan, also anticipates BNM to maintain the OPR at 2.75% in the September meeting. He noted that BNM is likely adopting a wait-and-see stance following the pre-emptive 25-basis point cut in July. Additionally, there is building optimism around a potential Federal Reserve (Fed) rate cut in September. The upcoming US non-farm payrolls report will be crucial for Fed policy decisions, as labor market dynamics are central to the Fed's dual mandate of maximum employment and price stability.
On a week-to-week basis, the ringgit ended lower against the greenback, closing at 4.2230/2275 compared to the previous 4.2245/2295. The local currency also traded lower against a basket of major currencies, depreciating against the Japanese yen, euro, and British pound. However, it performed mixed against ASEAN currencies, declining against the Singapore dollar and Thai baht, while gaining against the Indonesian rupiah and appreciating against the Philippine peso.