Ringgit Strengthens Amid Softer US Dollar And Mixed US Economic Data
The ringgit opened stronger against the US dollar on Friday, buoyed by a weaker US Dollar Index (DXY) and a mixed bag of US economic indicators, according to analysts.
At 8 am, the local unit rose to 4.2575/2860 against the greenback, improving from Thursday's close of 4.2705/2765. It also made gains across the board against both major and regional currencies.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DXY stayed below the 100-point mark, reflecting tempered market sentiment on the dollar.
He noted that although the US initial jobless claims were slightly lower than expected at 227,000 (versus a consensus forecast of 230,000), the number of continuing claims rose to 1.90 million from 1.87 million. 'This suggests that the labour market is still resilient,' he told local media.
Meanwhile, the US manufacturing sector posted positive momentum, with the Purchasing Managers Index (PMI) climbing to 52.3 points in May from 50.2 in April. 'A significant rise in new orders was the main driver,' he added. However, other components such as employment were muted, and businesses were increasing inventories in anticipation of higher tariffs and prices.
Mohd Afzanizam also pointed to political developments in the US, highlighting the passage of the One Big Beautiful Bill Act by the House of Representatives. The bill extends the 2017 tax cuts, introduces new deductions for tips, and raises the cap on state and local taxes.
'Budget deficits are likely to balloon from the current 6.1% of gross domestic product (GDP). This will impact the government's debt burden, which already stands at 100% of GDP,' he said. He added that a weaker US dollar in this context bodes well for emerging market currencies, including the ringgit.
At the same time, the ringgit recorded broad-based gains. It appreciated to 2.9591/9791 against the Japanese yen (from 2.9768/9812), 5.7131/7514 versus the British pound (from 5.7212/7292), and 4.8029/8350 against the euro (from 4.8218/8286).
Regionally, it strengthened to 3.2943/3166 against the Singapore dollar (from 3.3061/3110), and to 12.9498/13.0484 against the Thai baht (from 13.0000/0254). The local note also rose to 260.7/262.6 against the Indonesian rupiah (from 261.5/262.0), and 7.65/7.71 vis-a-vis the Philippine peso (from 7.68/7.69). Related
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