Ringgit Opens Marginally Higher Against US Dollar as Soft US Economic Data Weighs on Greenback

KUALA LUMPUR, Aug 6 — The ringgit opened slightly higher against the US dollar on Thursday morning, supported by improved market sentiment after weaker-than-expected economic data from the United States weighed on the greenback.

At 8:00 am, the local currency strengthened marginally to 4.0905/0960 against the greenback from Wednesday’s closing level of 4.0920/0960.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that softer US economic indicators pushed the US Dollar Index (DXY) down by 0.18 percent to 99.676 points. He pointed out that the Automatic Data Processing (ADP) Nonfarm Employment Change registered at 44,000 in July—falling short of the 68,000 consensus estimate and dropping from 95,000 in June—while the US Institute for Supply Management (ISM) non-manufacturing index came in at 54.1, below the expected 54.5.

“The Automatic Data Processing (ADP) Nonfarm Employment Change came in at 44,000 in July, below the consensus estimate of 68,000 and down from 95,000 in June. The US Institute for Supply Management (ISM) non-manufacturing index stood at 54.1 in July, below the consensus estimate of 54.5,” Afzanizam said.

He added that US Federal Reserve Governor Lisa Cook indicated she would support an interest rate hike should inflation remain persistently high, while commodity dynamics also influenced market outlooks.

“In addition, the potential reopening of the Strait of Hormuz has kept Brent crude prices below US$80 per barrel. As such, the US dollar/ringgit pair is expected to trade between RM4.07 and RM4.09 today,” Afzanizam noted.

Meanwhile, Quintex Intel global strategist Stephen Innes stated that the broader US dollar was slightly weaker in early trade, though risk sentiment softened as market participants await final details of a potential West Asia peace deal.

“Markets are also entering the 48-hour window ahead of the US non-farm payrolls report, prompting traders to rebalance risk and reduce exposure,” Innes explained. “This suggests the ringgit may remain confined to a relatively narrow trading range in the early hours.”

Despite its gain against the greenback, the ringgit traded mostly lower against a basket of major currencies. It eased against the Japanese yen to 2.5942/5978 from 2.5940/5967 at Wednesday’s close and slipped against the euro to 4.7266/7329 from 4.7222/7268, but strengthened against the British pound to 5.5087/5161 from 5.5107/5161.

Against regional currencies, the local note posted mixed performance. It weakened against the Singapore dollar to 3.1932/1978 from 3.1916/1950 and fell against the Thai baht to 12.3655/3881 from 12.3216/3381. Conversely, the local unit edged up against the Indonesian rupiah to 228.0/228.5 from 228.1/228.5 and remained unchanged against the Philippine peso at 6.73/6.74.

–NMT