Ringgit opens higher against dollar after weaker US jobs data

KUALA LUMPUR: The Malaysian ringgit opened stronger against the US dollar on Monday, following weaker than expected US non-farm payrolls (NFP) data. At 8am, the local currency was trading at 4.0875/4.0925 against the greenback, a rise from Friday's close of 4.0885/4.0930. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid pointed out that NFP for July disappointed, with only 23,000 jobs created, far below the estimated 88,000.

Additionally, the US Labour Force Participation Rate (LFPR) has declined for eight straight months to 61.4%, while Average Hourly Earnings increased modestly to 3.2% in July, indicating the US labour market may not be as strong as anticipated. As a result, the probability of an interest rate hike during the September Federal Open Market Committee (FOMC) meeting has decreased to 43.9%, down from 57% prior to the NFP report.

Despite the ringgit's stronger performance, Rashid cautioned that uncertainties surrounding the Strait of Hormuz's reopening could influence market sentiment. Consequently, the ringgit is expected to remain within the RM4.07 to RM4.09 range for the day. The local currency declined against the Japanese yen, euro, and British pound, but remained stable against the Singapore dollar and Indonesian rupiah, and slightly weaker against the Thai baht.