KUALA LUMPUR: The ringgit opened lower against the US dollar on Monday after the higher US Nonfarm Payroll (NFP) data released last Friday is expected to bolster the greenback.
At 9.06am, the ringgit slipped to 4.7150/4.7200 versus the greenback from Friday’s close of 4.6900/4.6940.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid noted that the May NFP report showed 272,000 new jobs in May, surpassing consensus projection of 182,000.
He said the US average weekly earning was also higher at 4.1% year-on-year in May from 4.0% previously, giving the impression that wage growth is still resilient.
“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 noted.
While the NFP may seem strong, the decline in the Labour Force Participation Rate (LFPR) has declined to 62.5% in May after sustaining at 62.7% for two months in a row, indicating that the US labour market is not entirely robust as people are opting out from the labour market.
Hence, the latest assessment by the US Federal Reserve on the state of labour market is quite critical as this will justify its decision to maintain or remove the tight monetary policy that are currently being implemented.
“A shift towards easing bias would lift the ringgit,” he added.
In the meantime, the ringgit traded higher against a basket of major currencies.
The local unit strengthened versus the Japanese yen to 3.0066/3.0100 from 3.0163/3.0190 at the close last Friday, rose vis-a-vis the British pound to 5.9994/6.0057 from 6.0009/6.0060 previously and was higher against the euro at 5.0814/5.0867 from 5.1079/5.1122 last week.
It also traded mixed against its Asean peers.
The ringgit improved against the Thai baht to 12.7743/12.7944 from 12.8465/12.8627 at last Friday’s close and rose versus the Singapore dollar at 3.4861/3.4901 compared with 3.4872/3.4905 previously.
However, it slid against the Philippines’ peso to 8.02/8.04 from 8.01/8.02 last week and slipped to 291.1/291.5 vis-a-vis the Indonesian rupiah from Friday’s 289.5/289.9. - FMT
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