Kuala Lumpur: The ringgit opens marginally higher against the US dollar on Thursday, amid weaker-than-expected United States (US) economic data and tariff uncertainties, an analyst said. At 8 am, the local note inched up to 4.2410/2495 versus the greenback from Wednesday’s close of 4.2435/2490.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) declined by 0.44 percent to 98.787 points, as economic indicators surprised on the downside. He highlighted that the US Institute for Supply Management (ISM) Index for the services sector fell below the 50-point demarcation line to 49.9 in May, defying consensus estimates of 52.0 points.
In his analysis, Dr Mohd Afzanizam pointed out that based on the survey response by the ISM, import tariff was the major source of uncertainties among businesses as it has raised the raw material prices, and some suppliers are holding back inventory given the tariff uncertainties. This scenario could potentially lead to stronger emerging market currencies, as traders and investors reassess the strength of the US economy. He also emphasized that Friday’s Nonfarm Payroll would be another important barometer to monitor.
Furthermore, Dr Mohd Afzanizam mentioned that the upcoming Federal Open Market Committee meeting on June 16-17 would serve as another critical milestone, as the US Federal Reserve staff prepares to issue their latest macroeconomic forecast for the next three years.
At the opening, despite its gain against the US dollar, the ringgit traded lower against a basket of major currencies. The ringgit slid against the Japanese yen to 2.9705/9767 from Wednesday’s close of 2.9444/9486, fell vis-a-vis the euro to 4.8428/8525 from 4.8300/8362, and depreciated against the British pound to 5.7466/7581 from 5.7427/7502 previously.
The local note also exhibited a mostly lower trend against its ASEAN peers. It remained flat versus the Philippine peso at 7.60/7.62, unchanged from its close on Wednesday. However, the ringgit declined against the Singapore dollar to 3.2973/304 from 3.2906/2951 on yesterday’s close, weakened versus the Thai baht to 13.0132/0493 from 12.9679/9911, and eased versus the Indonesian rupiah at 260.2/260.8 compared to 260.4/260.8 previously.