KUALA LUMPUR: AmBank Research sees the upside risk for the ringgit to remain due to choppy oil price, despite the US dollar’s momentum is faltering.
It said on Thursday it believes the excess supply from slower global growth and easing of infrastructure constraints on US shale supply fades will continue to add some pressure on oil.
“For the Malaysian market, concern on fiscal deficit will creep up should the oil prices continues to slide for a prolonged period,” it said.
AmBank Research pointed out that for now, it thinks the -3.7% deficit in 2018 should be within reach but focus would be on 2019 deficit of -3.4% if the prices stays below US$60 per barrel.
“Should price stay below US$60, we can expect the budgets to be recalibrated.
“On that note, we foresee ringgit to trade between our support level of 4.1766 and 4.1843 while our resistance is pegged at 4.2025 and 4.2077,” it said.
Reuters reported on Thursday US crude was a shade lower at US$55.92 per barrel after gaining 1% overnight, snapping a 12 day losing run on growing prospects that the Organization of the Petroleum Exporting Countries and allied producers would cut output.
With global demand concerns also causing the steepest one-day loss for oil in more than three years on Tuesday, the market reversed course after Reuters reported that OPEC and its partners were discussing a proposal to cut output by up to 1.4 million barrels per day (bpd), more than officials had mentioned previously.