By Karina Imran
KUALA LUMPUR, Aug 18 (Bernama) -- The ringgit opened firmer against the greenback on Monday amid cautious sentiment over the trajectory of the United States (US) interest rates, said an analyst.
At 8 am, the local note was slightly higher at 4.2050/2260 from Friday’s close of 4.2085/2155.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said expectations for a September rate cut are gaining momentum, with the US Federal Reserve anticipated to implement its first interest rate reduction of the year.
"Given that consumer spending accounted for more than two-thirds of the US economy, the case for a September rate cut is gaining more steam," he told Bernama.
The University of Michigan Consumer Sentiment Index (CSI) fell to 58.6 points in August versus 61.7 points in the prior month. Other measures such as the Current Condition Index and the Expectation Index also declined during August.
"This suggests that consumer spending will likely weaken, while higher prices due to increased import tariffs may prevent them from splurging," he said.
Against this backdrop, the ringgit may revisit the psychological level of RM4.20 today.
The impression that the Fed might be behind the curve in cutting interest rates lower seems to weaken the US dollar in the near term. The US Dollar Index (DXY) is hovering at 97.850 points.
At the opening today, the ringgit was higher against major currencies, but depreciated vis-a-vis the euro to 4.9224/9470 from Friday's closing of 4.9185/9267.
It strengthened versus the Japanese yen to 2.8557/8701 from Friday's close of 2.8653/8702 and gained against the British pound to 5.6999/7283 from 5.7050/7145.
The ringgit also traded firmer against regional peers.
It appreciated versus the Singapore dollar to 3.2777/2944 from 3.2820/2877 at Friday’s close and rose against the Thai baht to 12.9361/13.0091 from 12.9760/13.0032.
The local currency also improved against the Philippine peso to 7.36/7.41 from 7.37/7.39 previously and was almost flat against the Indonesian rupiah to 260.0/261.4 from 260.2/260.8.
-- BERNAMA
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