Ringgit opens lower amid mixed US economic, market signals

KUALA LUMPUR: The Malaysian ringgit opened weaker on Friday, as conflicting signals from the US economy and financial markets affected the greenback's prospects. At 8am, the local currency fell to 4.0450/0520 against the US dollar, down from Thursday's close of 4.0445/0490. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the dip to the US Dollar Index's slight rise of 0.03 per cent to 101.60, buoyed by a resilient US labor market.

The labor market indicator, exemplified by initial jobless claims, continued to drop to 189,000 last week, indicating a robust US labor market. However, Afzanizam noted that the 2 and 10-year US Treasury yields had declined by 12 and 5 basis points to 4.46 per cent and 4.83 per cent, respectively, showing that markets may be skeptical about the rate-tightening cycle and possibly hinting at a gradual slowdown in rate hikes.

The planned expansion of artificial intelligence data centers in the US might also face increased scrutiny by US Congress in 2027, potentially dampening optimism over sector valuations. Simultaneously, a sharp decline in technology-related stocks indicated that investors were becoming more cautious about the sector's premium. Consequently, the ringgit is expected to trade within a narrow range of RM4.04 to RM4.05 throughout the day.

The local currency exhibited mixed performance against major currencies, gaining against the euro, British pound, and Singapore dollar, while declining against the Japanese yen and rupiah.