Ringgit opens on soft note to take breather from recent rally

KUALA LUMPUR: The ringgit opened on a soft note against the stronger US dollar on Monday, taking a breather after last week’s rally.

At 9.05am, the local currency stood at 4.1930/2000 against the US dollar compared with 4.1830/1900 at 6pm on Friday.

AxiCorp chief global market strategist Stephen Innes said with the better-than-expected US payroll numbers and uncertain tail risk around the Aug 15 trade talks, the market should expect local traders to tap the brakes a bit on the ringgit rally.

“However, should talks reaffirm China’s commitment to the trade deal, the ringgit should improve next week due to the reduction in trade war risk premium,” he told Bernama.

The US and China will hold high-level talks on Saturday to assess Beijing’s compliance with the bilateral trade agreement signed early this year,

“Overall, I’m more defensive this week on my ringgit call with the US dollar holding on to last week’s gains,” he said.

In addition, local traders are also closely monitoring the second quarter (Q2) gross domestic product data to be released on Friday.

Market players are anticipating weak numbers for the Q2 given the Covid-19-led lockdown, but believe the performance would still be better than other countries.

The ringgit was traded broadly lower against other benchmark currencies.

It dropped against the Singapore dollar to 3.0543/0606 from 3.0499/0562 on Friday and weakened versus the Japanese yen to 3.9646/9724 from 3.9589/9667.

The local currency decreased against the British pound to 5.4765/4860 from 5.4755/4864 and depreciated vis-a-vis the euro to 4.9435/9522 from 4.9426/9517 previously.