KUALA LUMPUR: The ringgit opened higher on Tuesday but is expected to trade cautiously as traders monitor Bank Negara Malaysia’s monetary policy committee meeting this Thursday alongside the upcoming US non-farm payrolls report on Friday.
The local currency strengthened to 4.2205/2300 against the US dollar compared to Friday’s closing rate of 4.2230/2275.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid expects BNM to maintain the Overnight Policy Rate at 2.75%.
“BNM has implemented an early OPR cut and I think the level of monetary policy accommodation is sufficient to support growth.
“More importantly, the market wants to see the central bank’s latest assessment of the current economic situation and its prospects,“ he told Bernama.
Globally, he said the latest University of Michigan Consumer Sentiment Index fell more than expected to 58.2 points in August, below the consensus estimate of 58.6 points.
“So far, the CSI has averaged 59.8 points in the first eight months of this year compared to 73.0 points in the same period last year, showing consumers are cautious about the US economic situation,“ he said.
Meanwhile, Mohd Afzanizam said the NFP is an important indicator for the Fed’s decision on 17 September, especially given significant revisions to June and May’s performance.
“Consensus estimates put NFP at 74,000 in August, higher than 73,000 last August,“ he said.
Therefore, he expects the ringgit to trade between 4.21 and 4.22 today as the US dollar shows a declining trend against other major currencies.
Simultaneously, the ringgit opened mostly lower against a basket of major currencies.
It strengthened against the Japanese yen to 2.8691/8758 from 2.8708/8741 last Friday but depreciated against the pound to 5.7171/7300 from 5.6833/6894 and fell against the euro to 4.9443/9554 from 4.9291/9343.
The ringgit was mostly lower against other ASEAN currencies.
The local currency depreciated against the Indonesian rupiah to 257.0/257.7 from 255.9/256.3, fell against the Singapore dollar to 3.2875/2952 from 3.2859/2899, and weakened against the Thai baht to 13.0601/13.0976 from 13.0327/0519 last Friday.
The ringgit strengthened against the Philippine peso to 7.37/7.40 from 7.39/7.40 last Friday. – Bernama
