The ringgit opened slightly higher against the US dollar on Monday as stronger-than-expected US non-farm payrolls (NFP) data lifted expectations of a potential interest rate hike by the US Federal Reserve (Fed) at its upcoming meeting, Bernama reported.
At 8am, the local currency edged up to 4.0415/0500 against the greenback from Friday’s close of 4.0425/0465.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the stronger NFP reading suggests the Fed could raise its benchmark interest rate at the Federal Open Market Committee (FOMC) meeting on Sept 15-16.
“The NFP came in at 162,000 in August, well above the consensus forecast of 55,000, while July’s figure was revised up to 21,000 from the initial estimate of 23,000.
“Labour force participation rate improved to 61.6 per cent after experiencing a persistent drop since January this year,” he told Bernama.
He expects Asian currencies to face a choppy session, with the ringgit likely to trade within a wider range of 4.04 to 4.06 against the US dollar.
“Currently, the market is watching the US consumer price index (CPI) on Friday. This is a critical data point as FOMC members will reconvene next week to deliberate their decision on the Fed Funds Rate, which currently stands at 3.50 per cent-3.75 per cent.
“The odds for a 25-basis-point hike have gone up, and that will shape the market sentiments this week,” he said.
Quintex Intel global strategist Stephen Innes said the ringgit is likely to trade in a relatively tight range early this week but retain a modestly positive bias.
He said higher energy prices could continue to support the ringgit as Malaysia remains a net energy exporter overall, largely due to its significant liquefied natural gas surplus.
“More importantly from a structural perspective, Malaysia continues to strengthen its position in the regional artificial intelligence (AI) and semiconductor supply chain, spanning assembly and testing, advanced packaging and increasingly digital infrastructure.
“That gives the ringgit an additional medium-term support channel whenever global capital rotates toward the Asian AI investment theme,” he added.
Against major currencies, the ringgit strengthened against the British pound to 5.4629/4744 from 5.4663/4717 on Friday and edged up 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.
Against regional currencies, the ringgit eased against the Singapore dollar to 3.1893/1965 from 3.1888/1923 and slipped against the Thai baht to 12.2715/3033 from 12.2693/2863.
The local note was almost flat against the Philippine peso at 6.45/6.47 from 6.45/6.46 and little changed against the Indonesian rupiah at 229.0/229.6 compared with 229.1/229.4 previously.
