KUALA LUMPUR: The ringgit opened lower against the US dollar on Monday after higher after the release of US Non-Farm Payroll (NFP) data last Friday is expected to support the USD. The ringgit fell to 4.7150/7200 against the US dollar at 9:06 am from Friday’s close of 4.6900/6940.
US NFP Data Impact
Dr Mohd Afzanizam Abdul Rashid, the chief economist at Bank Muamalat Malaysia Bhd, said that the NFP report for May showed 272,000 new jobs, beating the consensus forecast of 182,000.
He added that the average weekly wage in the US was also 4.1 per cent higher year-on-year in May than the previous 4.0 per cent, giving the impression that wage growth remains stable.
Anticipation of FOMC Decision
“On that note, ringgit should stay weak as the market awaits the Federal Open Market Committee (FOMC) decision on June 12, particularly their latest macroeconomic variable,” he told Bernama.
He further said that while the NFP may look solid, the dip in the Labour Force Participation Rate (LFPR) fell to 62.5 per cent in May after being at 62.7 per cent for two consecutive months. This suggests that the US labour market is not entirely robust as people withdraw from the workforce.
Importance of Federal Reserve’s Assessment
The US Federal Reserve’s latest assessment of the labour market situation is therefore highly critical as it will justify its decision to maintain or remove the restrictive monetary policy currently in place.
“A shift towards easing bias would lift the ringgit,” he added.
Ringgit’s Performance Against Other Currencies
Meanwhile, the ringgit traded higher against a basket of major currencies.
The local currency rose to 3.0066/0100 against the Japanese yen from 3.0163/0190 last Friday, to 5.9994/6.0057 against the British pound from 6.0009/0060 and to 5.9994/6.0057 against the euro from 5.1079/1122 last week from 5.0814/0867.
Its trading has also been mixed against the currencies of its ASEAN partners. The ringgit rose to 12.7743/7944 against the Thai baht from 12.8465/8627 last Friday and to 3.4861/4901 against the Singapore dollar from 3.4872/4905 earlier.
However, against the Philippine peso, it fell to 8.02/8.04 from 8.01/8.02 last week and against the Indonesian rupiah, it dropped to 291.1/291 from 289.5/289.9 on Friday.
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