By Mohd Khairi Idham Amran

KUALA LUMPUR, May 18 (Bernama) -- The ringgit is expected to depreciate to RM4.20 against the US dollar next week on lack of trading due to the public holidays.

The market will be closed on Monday for Wesak Day and Wednesday for Nuzul Al-Quran celebration.

Phillip Capital Management, Asia-Pacific, senior vice president (investment) Datuk Dr Nazri Khan Adam Khan said market activity during the holiday-shortened week is expected to slow down.

“The ringgit will decline to RM4.20 against the US dollar before recovering to a better level,� he told Bernama.

FXTM analyst Han Tan said the ringgit is expected to move in tandem with other Asian currencies, as global risk sentiment remains delicate on the direction of the United States-China trade outlook.

“With both China and the US appearing to ramp up the confrontational rhetoric, risk aversion is likely to continue casting a cloud over emerging market assets as long as a formalised US-China trade deal remains elusive,� he said.

He said Asia is known for being reliant on Chinese economic momentum; therefore, the risks on the region’s outlook should not be understated if China’s economy experienced a slowdown in light of the trade dispute with the US.

For the week just ended, the ringgit traded mostly lower against the US dollar, derailed by the non-favourable US-China trade talks development and cautious mode on Bank Negara Malaysia's first quarter (Q1) gross domestic product (GDP) announcement.

Nevertheless, Tan said, the ringgit was among the better performers in Asia this week despite the risk-off sentiment continuing to permeate regional markets amid the re-intensification of US-China tensions.

“The ringgit’s surge following the Q1 GDP announcement on Thursday proved fleeting, only to retrace gains and trade back above the 4.17 level against the US dollar.

“Still, Malaysia’s better-than-expected headline Q1 GDP underscores the resilience of its domestic fundamentals, which will be tested over the course of the year by external headwinds that are pressuring emerging markets,� he added.

On a Friday-to-Friday basis, the ringgit fell to 4.1750/1780 against the US dollar from 4.1570/1600 previously.

It was traded mostly higher against other major currencies.

The local currency strengthened against the Singapore dollar to 3.0335/0368 from 3.0503/0534 but versus the Japanese yen, it dropped to 3.8051/8093 from 3.7843/7880.

The ringgit went up against the British pound to 5.3265/3324 from 5.4091/4147 and appreciated vis-a-vis the euro to 4.6601/6652 from 4.6683/6733.

– BERNAMA