KUALA LUMPUR: The ringgit opened stronger against the US dollar on Tuesday, supported by concerns that a potential United States (US) government shutdown could weigh on the greenback, an analyst said.
Reports indicated that the US federal government is on the brink of a shutdown unless the US Congress reaches a funding agreement before the start of the new fiscal year on Oct 1.
At 8 am, the local note stood at 4.2125/2210 against the greenback compared with Monday’s close at 4.2150/2200.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said a US government shutdown would be significant, as it could hamper the functioning of key agencies such as the Bureau of Labor Statistics.
He noted that the release of important data points, such as the nonfarm payroll report due this Friday, might be delayed.
“If materialised, it would result in difficulties in discerning the latest trend in the US labour market at a time when the Federal Reserve (Fed) has highlighted increased downside risks to employment,” he told Bernama.
Mohd Afzanizam said the US Dollar Index (DXY) was down about 0.25 per cent to 97.906 points.
He noted that the ringgit, which gained 0.12 per cent to RM4.2175 against the US dollar yesterday, is expected to trade between RM4.20 and RM4.21 today.
“Again, the ringgit could attempt to breach the psychological level of RM4.20, especially if the Fed proceeds with interest rate cuts should a government shutdown occur,” he added.
At the opening, the ringgit was mostly higher against a basket of major currencies.
It firmed to 2.8340/8399 against the Japanese yen from 2.8365/8400 at Monday’s close, it increased to 5.6582/6696 against the British pound from 5.6612/6679, but declined to 4.9404/9504 versus the euro from 4.9387/9446.
The local note was also mostly higher against ASEAN currencies, except for the Thai baht.
It advanced to 3.2653/2723 vis-à-vis the Singapore dollar from 3.2664/2706, edged up against the Indonesian rupiah at 252.5/253.1 from 252.6/253.1, appreciated versus the Philippine peso at 7.24/7.26 from 7.25/7.26 previously, but eased to 13.0669/1002 against the Thai baht from 13.0649/0857 previously. – Bernama