Kuala lumpur: The ringgit opened slightly lower against the US dollar on Friday, influenced by stronger-than-expected US economic data that favored the greenback.

According to BERNAMA News Agency, the local currency eased to 4.0680/0745 against the greenback from 4.0630/0670 at Thursday's close. Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid highlighted that the US producer price index (PPI) increased more than predicted, reaching 5.4 percent year-on-year in August, up from 4.8 percent in July, surpassing consensus estimates of 5.3 percent. Core PPI also climbed to 4.6 percent from 4.3 percent, while the US Dollar Index (DXY) rose by 0.26 percent to 99.077 points.

Dr. Mohd Afzanizam explained that businesses seem inclined to pass on their rising costs to consumers, suggesting that the consumer price index (CPI) could remain elevated upon its release. This development has fueled speculation about a potential US interest rate hike, bolstering the US dollar.

Quintex Intel global strategist Stephen Innes noted that the robust PPI figures have increased the likelihood of a US Federal Reserve rate hike next week to about 75 percent. This has put some pressure on the ringgit, especially with weaker global equities and a shift towards defensive risk sentiment.

Innes added that despite these pressures, the ringgit is not expected to weaken dramatically against the broader US dollar. It benefits from support by a more hawkish Bank Negara Malaysia and resilient domestic economic indicators, particularly in sectors linked to the artificial intelligence boom.

The ringgit showed mixed performance against major currencies at the opening. It strengthened against the Japanese yen, euro, and British pound, while trading mixed against regional currencies, gaining versus the Singapore dollar and Thai baht but remaining relatively unchanged against the Indonesian rupiah and slightly declining against the Philippine peso.