KUALA LUMPUR (June 26): External concerns will continue to play an important role in determining the direction of the ringgit next week, with investors closely monitoring developments in the United States.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said talks about a possible US quantitative easing resurface from time to time to influence the foreign exchange market (forex) to remain volatile in a near future.

“Expect the US dollar / ringgit to trade in a narrow range between RM 4.15 and RM 4.16 next week,” he told Bernama.

He explained that the markets would look at business confidence indicators such as the US Institute of Supply Management’s (PMI) Purchasing Managers’ Index (PMI) for manufacturing, which is expected to be around 61 points for June against 61.2 points in May.

“Employment figures will also be in the spotlight, such as non-farm payroll (NFP), which is expected to be higher this month compared to last month. At the same time, the unemployment rate is expected to decline further to 5.7% in June, from 5.8% the previous month, ”he said.

Echoing a similar sentiment, Jeffrey Halley, OANDA’s senior Asia-Pacific market analyst, said currency markets will continue to fluctuate with a slight trend in the strength of the US dollar.

“With an eye on next week’s PMIs from Asia and the US NFP, currency markets will continue to move sideways, with the US dollar quietly consolidating the gains of the previous week,” he said.

For the week that just ended, the US dollar and Asian currencies did not experience a noticeable downward correction this week, with the ringgit, Thai baht and Indonesian rupee recording virtually no gains, although the Korean won and the Philippine peso made up some lost ground.

“The rebound in fear of inflation was reflected in slightly stronger developed market currencies and not in emerging market currencies.

“This suggests that markets remain concerned about the low level of US rates and the increased strength of the US dollar. I do not disagree at all with this premise and next week’s US NFP figures could answer that question for us, “he added.

During this time, however, the ringgit traded mostly weaker against other major currencies.

Against the Singapore dollar, the local unit fell to 3.0964 / 0980 from 3.0851 / 0875 a week earlier, the local note depreciated against the British pound to 5.7781 / 7802 against 5.7526 / 7568, and against the euro it depreciated to 4.9627 / 9645 from 4.9308 / 9344 the week before.

However, against the yen, it fell to 3.7526 / 7540 from 3.7570 / 7598 previously.