KUALA LUMPUR: The ringgit is expected to continue its uptrend amid cautious sentiment due to global geopolitical tensions, trading between RM4.17 and RM4.18 against the US dollar this week, an economist told Bernama.

       The focus will remain centred on the war in Ukraine this week, said Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, according to the the local news agency.

       “Further appreciation is somewhat limited given that the balance of risks is still tilted on downside risks, paving the way for the demand of safe-haven currencies,” he said.

       “While the military conflict in Ukraine is extremely concerning, the sharp rise in commodity prices such as the Brent crude and crude palm oil (CPO) has been music to our ears.”

       Back home, investors are expected to remain positive over the decision by Bank Negara to maintain the overnight policy rate (OPR) at 1.75%.

       OCBC Bank reckons that the central bank can afford to have more space in hewing close to its historic-low policy rate of 1.75% for longer than its peers amid rising crude oil prices.

       The bank’s economist Wellian Wiranto said Malaysia’s current account surplus status is likely to be bolstered further by the recent ballistic move in commodity prices as the country is among the few net commodity exporters in the region.

       “That will leave it less vulnerable than others to United States Federal Reserve’s fund hikes,” he said in a research note.

       While keeping the OPR unchanged, the Malaysian central bank has continued to note downside risks to growth, with the Russia-Ukraine situation constituting “a key risk” to growth and trade trajectories, alongside shocks to commodity prices and supplies.

       Economists expect Bank Negara to raise its interest rate in the third quarter this year by 25 basis points.