THE ringgit opened stronger against the US dollar on Monday as renewed expectations of a Federal Reserve rate cut emerged following weaker-than-expected US labour market data. At 8 am, the local currency rose to 4.2350/2550 against the greenback, up from Friday’s close of 4.2750/2815.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the ringgit’s rebound to disappointing US Non-farm Payroll (NFP) figures. The US Bureau of Labour Statistics reported only 73,000 jobs added in July, well below market forecasts of 110,000.
“The weaker labour market strengthens the case for a Fed rate cut in September,“ said Mohd Afzanizam. “The US Dollar Index (DXY) has already dropped to 98.708 points, while the 2-year US Treasury yield fell sharply by 25 basis points to 3.69 per cent last Friday.”
He added that the ringgit, which depreciated by 0.22 per cent on Friday, could trade between 4.26 and 4.27 today. However, the local currency weakened against other major currencies, slipping against the Japanese yen, British pound, and euro.
In contrast, the ringgit strengthened against regional currencies, rising against the Singapore dollar but dipping slightly against the Thai baht. It also gained against the Philippine peso and Indonesian rupiah. – Bernama