Malaysian ringgit strengthens towards 4.21 as investors anticipate Bank Negara Malaysia's decision on the Overnight Policy Rate (OPR)
Employers in the United States are displaying caution regarding the expansion of their workforce, due to a weaker economic outlook. This trend is reflected in the latest US Job Openings and Labour Turnover Survey for July, which showed job openings falling below expectations to 7.181 million.
Meanwhile, in Malaysia, the economy is showing signs of resilience. Despite a headline inflation rate of 1.2%, unemployment remains low at 3.0%. July exports posted positive growth, and the ringgit, the Malaysian currency, has shown mixed performance.
The ringgit opened slightly firmer against the US dollar on Thursday, rising to 4.2125/2330 from Wednesday's close of 4.2230/2285. Throughout the week, the ringgit has exhibited a complex pattern, rising against the rupiah, the Singapore dollar, the peso, and the baht, but slipping versus the yen, the euro, and the pound.
Markets widely expect Bank Negara Malaysia (BNM) to leave the overnight policy rate (OPR) unchanged at 2.75% in the upcoming decision. This approach by BNM ensures policy stability, supports domestic demand, and keeps monetary conditions accommodative without adding inflationary pressure.
Notably, Dr. Mohd Afzanizam Abdul Rashid, the Chief Economist of Bank Muamalat Malaysia Bhd, suspects that the US Federal Reserve may possibly reduce the benchmark interest rate in September. This prediction is shared by Mohd Sedek Jantan, an investment strategist and country economist at IPP Wealth Managers Ltd, who expects BNM to keep the OPR steady at 2.75%.
Dr. Mohd Afzanizam also expects the ringgit to trade in the 4.21-4.23 range today. The US will release its non-farm payrolls report on Friday, which could provide further insights into the global economic outlook.
In conclusion, while the US job market appears to be slowing, Malaysia's economy remains robust with low unemployment and positive export growth. The ringgit's performance reflects the complexities of global currency markets, while BNM's policy decisions aim to maintain stability and support domestic demand.
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