Kuala lumpur: The ringgit opened stronger against the US dollar on Tuesday, bolstered by concerns over a potential United States government shutdown, according to an analyst. This development comes as reports suggest that the US federal government is on the cusp of a shutdown unless the US Congress can reach a funding agreement before the commencement of the new fiscal year on October 1.

According to BERNAMA News Agency, the local currency stood at 4.2125/2210 against the greenback at 8 am, compared to Monday’s close of 4.2150/2200. Bank Muamalat Malaysia Bhd’s chief economist, Dr. Mohd Afzanizam Abdul Rashid, highlighted the potential significance of a US government shutdown, which could disrupt the operations of critical agencies like the Bureau of Labor Statistics. He noted that this could delay the release of essential data, such as the nonfarm payroll report scheduled for this Friday.

Dr. Mohd Afzanizam emphasized that if a shutdown occurs, it would create challenges in understanding recent trends in the US labor market, particularly at a time when the Federal Reserve has underscored increased downside risks to employment. He pointed out that the US Dollar Index (DXY) had decreased by approximately 0.25 percent to 97.906 points.

He further mentioned that the ringgit, which had gained 0.12 percent to RM4.2175 against the US dollar the previous day, is anticipated to trade between RM4.20 and RM4.21 today. He suggested that the ringgit might attempt to breach the psychological level of RM4.20, especially if the Federal Reserve decides to cut interest rates in the event of a government shutdown.

At the market opening, the ringgit showed strength against a range of major currencies. It rose to 2.8340/8399 against the Japanese yen from the previous close of 2.8365/8400 and increased to 5.6582/6696 against the British pound from 5.6612/6679. However, it declined to 4.9404/9504 versus the euro from 4.9387/9446.

The ringgit also performed well against most ASEAN currencies, except for the Thai baht. It advanced to 3.2653/2723 against the Singapore dollar from 3.2664/2706, gained ground against the Indonesian rupiah at 252.5/253.1 from 252.6/253.1, and appreciated against the Philippine peso at 7.24/7.26 from 7.25/7.26 previously. Conversely, it eased to 13.0669/1002 against the Thai baht from 13.0649/0857 previously.