THE ringgit opened lower against the US dollar this morning, weighed down by strong US labour market data which increased chances that the Federal Reserve (Fed) would maintain its restrictive stance on monetary policy, an economist said. 

At 9am, the local unit fell to 4.6680/6725 versus the greenback compared with 4.6580/6630 at yesterday’s close.

The latest ADP Nonfarm Employment Change data for the month of June reportedly rose higher than expected to 497,000 versus 228,000 forecast. 

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said this might warrant the Fed to maintain its restrictive stance on monetary policy to bring down inflation towards its 2% target. 

“The US dollar should be well supported for as long as the market believes the Fed will continue its interest rate hike campaign,” he told Bernama.

In addition, tonight’s US data point is critical – the Nonfarm Payroll (NFP) – which is expected to go up by 339,000 in June based on consensus estimates from 225,000 in the preceding month.

Afzanizam said the ringgit is likely to stay soft as the Fed is seen to be on track to deliver another 25 basis points hike in the upcoming Federal Open Market Committee meeting on July 25-26. 

Meanwhile, the ringgit was traded lower against a basket of major currencies. 

It declined vis-a-vis the euro to 5.0811/0860 from 5.0600/0654 at Thursday’s close, slipped against the Japanese yen to 3.2401/2434 from 3.2323/2359 and weakened against the British pound to 5.9433/9490 from 5.9310/9374 at the close yesterday.

The local note traded mixed against other Asean currencies. 

The ringgit was down versus the Singapore dollar at 3.4496/4532 from 3.4458/4497 on Thursday’s close but rose against the Thai baht to 13.2335/2516 from 13.2881/3088.  

It was almost flat against the Indonesian rupiah to 309.9/310.4 from 309.3/309.8 and flat against the Philippine peso at 8.39/8.40. – Bernama, July 7, 2023.