Kuala lumpur: The ringgit opened firmer against the greenback on Monday amid cautious sentiment over the trajectory of the United States (US) interest rates, said an analyst. At 8 am, the local note was slightly higher at 4.2050/2260 from Friday’s close of 4.2085/2155.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that expectations for a September rate cut are gaining momentum, with the US Federal Reserve anticipated to implement its first interest rate reduction of the year. “Given that consumer spending accounted for more than two-thirds of the US economy, the case for a September rate cut is gaining more steam,” he explained.
The University of Michigan Consumer Sentiment Index (CSI) fell to 58.6 points in August compared to 61.7 points in the prior month. Other measures, such as the Current Condition Index and the Expectation Index, also saw declines in August. Dr. Mohd Afzanizam suggested that this indicates consumer spending may likely weaken, while higher prices resulting from increased import tariffs could discourage consumer splurging.
In this context, the ringgit might test the psychological level of RM4.20 today. The perception that the Fed could be lagging in cutting interest rates appears to weaken the US dollar in the near term, with the US Dollar Index (DXY) hovering at 97.850 points.
At the opening today, the ringgit was stronger against major currencies, although it depreciated against the euro to 4.9224/9470 from Friday’s closing of 4.9185/9267. It strengthened versus the Japanese yen to 2.8557/8701 from Friday’s close of 2.8653/8702 and gained against the British pound to 5.6999/7283 from 5.7050/7145.
The ringgit also traded firmer against regional peers. It appreciated against the Singapore dollar to 3.2777/2944 from 3.2820/2877 at Friday’s close and rose against the Thai baht to 12.9361/13.0091 from 12.9760/13.0032. The local currency also improved against the Philippine peso to 7.36/7.41 from 7.37/7.39 previously and was almost flat against the Indonesian rupiah to 260.0/261.4 from 260.2/260.8.