The ringgit opened slightly stronger against the United States (US) dollar in early trade today as sentiment towards the US currency remained weak despite several key economic data from the country showing better-than-expected performance.
At 10.20am, the ringgit was at RM4.0120, down 0.55% since it opened early Thursday in the Asian session.
This reflects that investors are still cautious about the US economic outlook, particularly regarding trade policies that are seen to be increasingly protectionist.
Bank Muamalat Malaysia Bhd Chief Economist, Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) rose 0.30 per cent to 99.519 points.
Although the latest economic data showed that the US economy was still in a strong state, business surveys found that many companies were facing pressure due to rising fuel costs and higher tariffs.
The latest data shows that the ISM Index for the services sector increased to 54.5 points in May compared to 53.6 points in April.
In addition, the ADP Employment Change report recorded an increase of 122,000 jobs in May, exceeding market expectations of 118,000 jobs.
Both data give the impression that economic activity and the US labor market remain resilient.
However, the increase in operating costs due to tariffs and higher fuel costs is expected to cause many businesses to pass on the burden of these costs to consumers.
Furthermore, the latest announcement by the US trade representative shows that trade policies that are more protective of domestic interests are expected to continue to be implemented.
This situation increases the cost of doing business and subsequently affects investor sentiment towards the US dollar.
In the foreign exchange market, the ringgit also recorded a better performance compared to most major world currencies.
The local currency strengthened against the British pound to 5.3613/3707 from 5.3727/3775, rose against the euro to 4.6357/6438 from 4.6400/6400, and strengthened against the Japanese yen to 2.4966/5011 from 2.5005/5027 at the previous close.
Against regional currencies, the ringgit performed mixedly.
It strengthened against the Singapore dollar to 3.1121/1178 from 3.1164/1193. The ringgit also rose slightly against the Indonesian rupiah to 222.2/222.7 from 222.3/222.7 previously, while remaining unchanged against the Philippine peso at 6.47/6.48.
However, the ringgit weakened against the Thai baht to 12.2051/2343 from 12.1825/1988 recorded previously.
