Kuala lumpur: The ringgit is expected to trade within a tight range against the US dollar next week, with investors remaining cautious ahead of key monetary policy decisions by the United States Federal Reserve (Fed) and the Bank of Japan (BOJ).

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid indicated that the focus next week will be on the Federal Open Market Committee (FOMC) and BOJ monetary policy meetings. Both central banks are anticipated to raise their respective policy rates by 25 basis points.

Market participants will also keep a close watch on the Fed's latest economic projections for gross domestic product (GDP) growth, inflation, the unemployment rate, and the federal funds rate, Dr Mohd Afzanizam told Bernama.

'Expectations of a rate hike by the US Fed have shaped sentiment in the foreign exchange market, lending support to the US dollar,' he added. Under these conditions, the ringgit is likely to remain within a tight range of between RM4.06 and RM4.08 against the US dollar next week.

External developments, particularly the sharp rise in crude oil prices amid the intensifying US-Israel-Iran conflict, are also expected to influence market sentiment. 'The escalation has pushed Brent crude oil prices higher to around US$104.64 per barrel,' Dr Mohd Afzanizam noted.

On a Friday-to-Friday basis, the ringgit weakened against the greenback to 4.0685/0725 from 4.0425/0465 a week earlier. The local currency traded lower against a basket of major currencies during the week.

The ringgit depreciated against the British pound to 5.4961/5015 from 5.4663/4717 last Friday, fell against the Japanese yen to 2.6400/6428 from 2.5832/5860, and declined against the euro to 4.7178/7225 from 4.6962/7008.

It also traded lower against ASEAN currencies. The local note weakened against the Singapore dollar to 3.2091/2125 from 3.1888/1923 a week earlier and depreciated against the Thai baht to 12.3072/3241 from 12.2693/2863. It also declined against the Indonesian rupiah to 231.0/231.3 from 229.1/229.4 and eased against the Philippine peso to 6.49/6.50 from 6.45/6.46 last Friday.