KUALA LUMPUR: The ringgit is set to endure another week of market volatility, as the market views the Organisation of the Petroleum Exporting Countries + (OPEC+) deal to cut production by about 10 million barrels per day in May and June as being insufficient amid low global demand, Kenanga Research said.
However, the deal may provide some support to oil prices from further downside, subsequently supporting the stability of ringgit, it said in a note today.
Last week, the local currency appreciated against the US dollar as the government announced additional assistance under the Additional Prihatin SME Economic Stimulus Package worth RM10 bil, amounting to 0.7% of the gross domestic product (GDP), It was further amplified by the optimism of an OPEC+ production cut and a weakening greenback.
On Sunday, the OPEC+ alliance finalised a deal to cut global output by nearly 10 million barrels per day as the COVID-19 pandemic has reduced demand for oil and driven down global oil prices.
On a technical analysis, Kenanga said the exponential moving average (EMA) revealed weakening bias for the ringgit this week as last week’s upside momentum ebbs.
The ringgit is expected to depreciate by 0.55% to 4.333 against the US dollar from its closing price of 4.310 last Friday, the research house said.
“The short-term view has cast a weakening bias for the ringgit with a strong resistance at 4.345 and minor support at 4.292 for the US dollar-ringgit.
“Alternatively, the ringgit may be due for an upswing should the pair break through the 4.275 support level, provided crude oil price breach and maintain above US$40 per barrel,” it added. – April 13, 2020, Bernama
