Ringgit seen moving in tight range

The ringgit is expected to move in a narrow range next week amid a lack of fresh leads and no indications from the United States, the world's largest economy, on boosting growth, dealers said.

"The news was not friendly and disappointed investors who had hoped for new stimulus measures. No new policies to revive the ailing US economy would have an impact on the region's growth as well," a dealer said.

Furthermore, persistent worries about the health of the US economy and Europe's sovereign debt problems are expected to boost demand for the greenback, hence, weaker Asian currencies including the ringgit.

"Most investors would prefer to keep safe assets like the US dollar or gold given that the global economic outlook has worsened lately. The greenback is certainly the choice after the US indicated no new steps to boost its economy," the dealer said.

Another dealer also believes that Asian currencies, including the ringgit will further decline amid slowing growth in the region, adding, the Asian forex market could face correction in the medium-term.

"The ringgit is likely to trade sideways and in a tight range band of between 2.98 and 3.00 against US dollar, amid a limited onshore catalyst with external headwind in the form of weak risk appetite plaguing sentiment," the dealer added.

The dealer said most emerging Asian currencies, including the ringgit, have slashed gains on persistent worries over a global economic slowdown and the European debt crisis. "The worries will continue to put pressure on emerging Asian currencies, including the ringgit," the dealer added.

The dealer further said that the local forex market is likely to be quiet next week amid a short trading week due to the Hari Raya and National Day holidays.

The market will be closed from Aug 30-Sept 1.

The ringgit ended the week lower at 2.9865/9895 per US dollar compared to 2.9790/9820 at last Friday's close. During the week, the ringgit was traded in a tight range of 2.96 to 2.98 against the greenback.

Against other major currencies, the ringgit ended mixed.

It declined against the Singapore dollar to 2.4758/4797 from 2.4604/4634 but gained against the Japanese yen to 3.8791/8855 from 3.8992/9057 last week.

The ringgit appreciated against the British pound to 4.8743/8798 from 4.9201/9257 but closed lower against the euro at 4.3116/3162 from 4.2647/2699 last Friday. -- Bernama