Ringgit opens slightly higher against US dollar

The Malaysian ringgit opened marginally higher against the US dollar on Monday, driven by positive expectations of a potential US interest rate increase following stronger-than-anticipated non-farm payrolls data. At 8am, the currency rose to 4.0415/4.0500 from last Friday's close of 4.0425/4.0465. Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, noted that the stronger-than-expected jobs report suggests the US Federal Reserve may raise its benchmark interest rate during the upcoming Federal Open Market Committee meeting on Sept 15-16.

The NFP came in at 162,000 in August, significantly higher than the 55,000 consensus forecast, and July's figure was revised upward to 21,000 from the initial estimate of 23,000. The labor force participation rate improved to 61.6% after a steady decline since January this year. Asian currencies might face a volatile trading session today, with the ringgit experiencing a wider fluctuation, potentially settling between 4.04 to 4.06 against the US dollar.

Market focus remains on the US Consumer Price Index report on Friday, as FOMC members prepare to discuss the Fed Funds Rate, which currently stands at 3.50%-3.75%. The likelihood of a 25-basis-point hike has risen, likely influencing market sentiment throughout the week. Quintex Intel's global strategist, Stephen Innes, expects the ringgit to trade relatively tight early in the week but with a modestly positive outlook.

Energy prices in Malaysia may provide support given the country's status as a net energy exporter, particularly through its significant liquefied natural gas surplus. Structurally, Malaysia's growing presence in the regional artificial intelligence and semiconductor supply chain, including assembly, testing, advanced packaging, and digital infrastructure, will offer medium-term support to the ringgit as global capital shifts towards Asian AI investment.

The currency performed relatively better against a basket of major currencies, appreciating against the British pound and euro while slipping against the Japanese yen. However, it traded lower against regional currencies such as the Singapore dollar and Thai baht.