KUALA LUMPUR: The ringgit is expected to remain stable next week although it may face downward pressure due to the current bullish outlook of the US dollar.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that at present, the US dollar appears to be in a favourable position.

The US Federal Reserve (Fed) governor Christopher Waller has urged a more cautious approach to interest rate cuts, pointing to recent economic data that highlighted the strength of the US economy and labour market, according to the latest media reports.

"The European Central Bank (ECB) recently cut rates, and there is a possibility of further reduction in the upcoming meeting, largely due to sluggish European economies, particularly Germany. Japan, meanwhile, is unlikely to raise rates, and several ASEAN countries have already begun cutting their policy rates, with Thailand being the latest to join the rate-cutting cycle," he told Bernama.

However, Mohd Afzanizam noted that Malaysia's Budget 2025 reaffirmed its commitment to narrowing the budget deficit to 3.8 per cent of gross domestic product (GDP) in 2025, which could be viewed positively by credit rating agencies.

The ringgit traded mostly lower against the greenback throughout the week, weighed down by a stronger US dollar supported by strong economic data. On a Friday-to-Friday basis, the ringgit fell against the US dollar to 4.3045/3075 from 4.2865/2910 a week ago.

However, it traded mostly higher against other major currencies.

It appreciated against the euro, closing at 4.6674/6706 from 4.6886/6935, and was marginally higher against the Japanese yen at 2.8708/8730 from 2.8780/8812 at last week's close. The local note weakened against the British pound at 5.6109/6148 from 5.6016/6075 previously.

The ringgit was mixed against ASEAN currencies. It was higher vis-a-vis the Singapore dollar to 3.2791/2817 from 3.2824/2861 and better against the Philippine peso at 7.48/7.49 compared to 7.49/7.50 in the previous week. However, it weakened against the Thai baht to 12.9579/9916 from 12.8504/8704 and was easier against the Indonesian rupiah to 278.0/278.3 from 275.1/275.5 last week.