The ringgit opened higher against the US dollar on Monday, supported by expectations that the United States Federal Reserve (Fed) could raise interest rates following stronger-than-expected US non-farm payrolls (NFP) data.
At 8am, the local currency stood at 4.0415/0500 against the US dollar, compared with Friday’s close of 4.0425/0465.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the stronger-than-expected NFP figures indicated that the Fed could raise its benchmark interest rate at the upcoming Federal Open Market Committee (FOMC) meeting on September 15 and 16.
“NFP came in at 162,000 in August, well above the consensus forecast of 55,000, while the July figure was revised to 21,000 from the initial estimate of 23,000.
“The labour force participation rate also increased to 61.6 per cent after declining steadily since January,” he told Bernama.
Mohd Afzanizam said Asian currencies could face a volatile trading session today, with the ringgit expected to trade within a wider range of 4.04 to 4.06 against the US dollar.
“Markets are currently watching the US Consumer Price Index (CPI) data due on Friday. This is important as FOMC members will meet again next week to discuss the Federal Funds Rate, which currently stands at 3.50 to 3.75 per cent.
“The possibility of a 25-basis-point rate hike is high and this will influence market sentiment this week,” he said.
Quintex Intel global strategist Stephen Innes said the ringgit was likely to trade within a narrow range at the beginning of the week, although with a modest positive bias.
He said elevated energy prices could continue to support Malaysia as the country remained a net energy exporter, largely due to its significant liquefied natural gas (LNG) surplus.
“More importantly from a structural perspective, Malaysia continues to strengthen its position in the regional AI and semiconductor supply chain, covering assembly and testing, advanced packaging and its growing digital infrastructure.
“This provides additional support for the ringgit in the medium term as global capital flows shift towards AI investment trends in Asia,” he said.
The ringgit traded mostly higher against a basket of major currencies.
It strengthened against the pound to 5.4629/4744 from 5.4663/4717 at Friday’s close and rose against the euro to 4.6934/7033 from 4.6962/7008.
However, it weakened against the Japanese yen to 2.5871/5927 from 2.5832/5860 previously.
Against regional currencies, the ringgit traded mostly lower.
It slipped against the Singapore dollar to 3.1893/1965 from 3.1888/1923 and declined against the Thai baht to 12.2715/3033 from 12.2693/2863.
The local currency was almost unchanged against the Philippine peso at 6.45/6.47, compared with 6.45/6.46 previously.
It also traded little changed against the Indonesian rupiah at 229.0/229.6, compared with 229.1/229.4 previously.
