Cautious trading ahead for ringgit

The ringgit is expected to trade cautiously against the US dollar next week amid expectations that the greenback will strengthen after US Federal Reserve Chairman, Ben Bernanke, dismissed the possibility of immediate additional stimulus in the US economy, dealers sad.

They said the ringgit will likely move sideways around the 3.0 level against the US dollar, tracking movements in regional currencies.

Bernanke commented that the US will assess its economy before launching a fresh round of stimulus injection.

The US dollar, rebounded on Thursday against major currencies after losing ground during the week due to Moody's warning that the US may face a rating downgrade on the possibility of the country missing its debt payments.

Dealers said Asian currencies will see a lot of volatility in view of the still fragile outlook in the global economy.

"The continuing fears of the impact from the euro debt crisis will also keep investors cautious," a dealer said.

During the week, the ringgit was traded on a downward trend against the US dollar as the European debt crisis, now spread to Italy, weighed on Asian currencies on concerns of global economic slowdown.

However, on Thursday the ringgit rebounded against the US dollar as positive Chinese economic data boosted Asian currencies including the ringgit.

On Friday, the ringgit erased earlier gains against the US dollar in line with weaker Asian currencies as investors shunned emerging Asian investments ahead of the release of European banks stress test results due later the day.

On a Friday-to-Friday basis, the ringgit was lower against the dollar at 3.0050/0080 from 2.9915/9945 last Friday.

It was also lower against the Singapore dollar at 2.4651/4696 from 2.4533/4561 last Friday and was lower against the yen at 3.7918/7965 from 3.6760/6819 previously.

The ringgit also eased against the British pound to 4.8341/8399 from 4.7768/7825 last Friday but rose against the euro to 4.2467/2518 from 4.2790/2842 last Friday.--Bernama