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THE ringgit opened marginally lower against the US dollar on Wednesday but traded higher against a basket of major currencies, as cautious market sentiment prevailed ahead of a series of key US labour-market indicators due this week.
At 8am, the local currency eased to 4.0475/0745 against the greenback, compared with Tuesday’s close of 4.0445/0495, reflecting early pressure on emerging-market currencies as traders positioned defensively.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the cautious mood among investors was weighing on currencies such as the ringgit at the start of the trading day.
“Traders are keeping a defensive stance, which tends to weigh on emerging-market currencies such as the ringgit at the start of the day,” he told Bernama.
Market attention this week is firmly focused on US labour-market data, including the Job Openings and Labour Turnover Survey and ADP employment figures, which are expected to provide fresh clues on the direction of US monetary policy.
Mohd Sedek said the broader outlook for the US dollar was becoming less supportive, despite its recent rebound late last year.
“The broader backdrop for the dollar is becoming less supportive. The late-December rebound has lost momentum, and markets are positioning for US interest rates to remain on hold later this month, which would gradually erode the dollar’s yield advantage,” he said.
He added that domestic fundamentals were helping to cushion the ringgit against sharper declines.
“As that plays out, Malaysia’s strengthening trade flows and resilient domestic demand provide a fundamental anchor for the ringgit, helping to limit downside and stabilise the currency as global sentiment normalises.”
Against major currencies, the ringgit opened on a firmer note. It strengthened against the Japanese yen to 2.5836/5902 from 2.5865/5899 on Tuesday, advanced against the euro to 4.7303/7420 from 4.7373/7432 and gained versus the British pound to 5.4637/4772 from 5.4742/4810 previously.
Performance against regional peers was mixed. The ringgit edged higher against the Indonesian rupiah to 241.5/242.2 from 243.1/241.7 and rose slightly against the Singapore dollar to 3.1604/1684 from 3.1608/1649.
However, it weakened against the Thai baht to 12.9678/13.0094 from 12.9383/9592 and was unchanged against the Philippine peso at 6.83/6.85 compared with 6.83/6.84 on Tuesday.
Market participants are expected to remain cautious in the near term, with movements in the ringgit closely tied to incoming US data and shifts in global risk sentiment. - January 7, 2025