The Bank Negara Malaysia monetary policy committee decision is expected to play a key role in setting market tone, says analyst.
According to research firms, BNM is anticipated to maintain the overnight policy rate (OPR) at 2.75% at its MPC meeting on Thursday.
This follows Malaysia’s advanced first-quarter gross domestic product growth forecast of 5.3% which showed that the country’s economy is resilient despite the unsteady global situation.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid expects the local note to be trading at a narrow range in the near term following the MPC meeting on May 7.
“We view that market sentiment will continue to remain cautious as investors are perplexed about whether global central banks’ benchmark interest rate should be raised or cut.
“There are certain jurisdictions, such as in Australia, the Philippines and Singapore, which have tightened their monetary stance.
“At the same time, there is also valid concern on global growth prospects, which may necessitate easing the monetary policy stance,” he told Bernama.
Meanwhile, SPI Asset Management managing partner Stephen Innes said continued equity inflows into Malaysia’s technology and semiconductor sectors have boosted local assets, supporting the ringgit.
He said investors’ appetite tied to artificial intelligence themes has provided an underlying buffer to local assets.
“However, renewed escalation in the US-Iran conflict has weakened risk sentiment and strengthened the US dollar, while briefly pushing Brent crude oil prices towards US$114 (RM451.67) per barrel.
“Overall, the ringgit remains influenced by external factors, including oil price volatility and US dollar strength, but the ringgit continues to show resilience due to supportive domestic equity flows,” he told Bernama.
However, it eased against the US dollar at 6pm today to 3.9600/3.9635 from 3.9540/3.9575 at yesterday’s close.
At the close, the ringgit traded mostly higher against a basket of major currencies.
It edged up against the Japanese yen to 2.5138/2.5163 from 2.5186/2.5210 at yesterday’s close, rose vis-a-vis the euro to 4.6288/4.6329 from 4.6329/4.6370 previously, but inched down versus the British pound to 5.3622/5.3670 from 5.3612/5.3660 yesterday.
The local currency was also mostly higher against regional peers.
It inched up against the Singapore dollar to 3.1013/3.1042 from 3.1019/3.1049 at yesterday’s close, appreciated versus the Thai baht to 12.1064/12.1223 from 12.1460/12.1631, gained vis-a-vis the Indonesian rupiah to 227.2/227.5 from 227.3/227.6 yesterday, but eased against the Philippine peso to 6.43/6.44 from 6.42/6.43 previously. - FMT
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