Local note edges higher but trades cautiously as key economic signals loom this week

The ringgit opened stronger against the US dollar on Tuesday, but traders remain cautious ahead of Bank Negara Malaysia’s (BNM) policy decision on Thursday and the release of the US non-farm payrolls (NFP) report on Friday.

Ringgit Opens Higher

At 8am, the ringgit stood at 4.2205/4.2300 against the US dollar, compared with last Friday’s close of 4.2230/4.2275. Analysts expect the currency to trade within the RM4.21 to RM4.22 range as markets weigh domestic and global developments.

Policy Rate Likely Unchanged

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid anticipates BNM will maintain its overnight policy rate (OPR) at 2.75%. He noted that the central bank had already delivered a pre-emptive cut and that the current level of monetary accommodation remains sufficient to support economic growth.

Global Sentiment and US Data

Globally, sentiment remains fragile. The University of Michigan consumer sentiment index slipped to 58.2 in August, below expectations of 58.6. The average of 59.8 for the first eight months of 2024 marks a sharp drop from 73.0 during the same period last year, reflecting growing consumer caution about the US economy.

The upcoming NFP report is viewed as a critical factor for the US Federal Reserve’s September 17 meeting. Consensus forecasts project 74,000 jobs added in August, slightly higher than July’s 73,000, though earlier months were revised down significantly.

Mixed Performance Against Other Currencies

The ringgit’s performance against other currencies was uneven:

• Strengthened against the Japanese yen (2.869/2.8758).
• Weakened against the euro (4.9443/4.9554) and British pound (5.7171/5.7300).
• Lower against regional peers, including the Indonesian rupiah (257.0/257.7), Singapore dollar (3.2875/3.2952), and Thai baht (13.0601/13.0976).
• Firmed against the Philippine peso (7.37/7.40).

Market Outlook

With the US dollar trending weaker against major currencies, the ringgit’s trajectory this week will hinge on BNM’s policy stance and the strength of US labour data. Investors are watching closely for signals that could shape regional currency flows in the coming months.

The ringgit’s cautious gains highlight the delicate balance between domestic policy decisions and global economic cues. For regional economies such as Indonesia and Singapore, movements in the Malaysian currency remain important indicators of trade competitiveness and financial stability.

Sources: Malay Mail (2025) , Free Malaysia Today (2025)

Keywords: Ringgit, Bank Negara Malaysia, Monetary Policy, US Dollar, Non-Farm Payrolls, Consumer Sentiment