KUALA LUMPUR — The ringgit opened higher against the US dollar as the United States paused import tariffs on Canada and Mexico, coupled with softer US economic data, said an analyst.
At 8 am today, the ringgit strengthened to 4.4500/4700 against the greenback compared to Monday’s close of 4.4710/4800.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US has agreed to pause a 25% import tariffs on goods from Canada and Mexico for a month as President Donald Trump was able to bring leaders from the two countries to the negotiating table.
“The way we see it, Trump is leveraging tariffs as a tool to negotiate for a better deal.
“While this can wreak havoc on market sentiments, the US economy is in good shape and it does not make sense if the seating president would want to reverse such a positive trend,” he told Bernama today.
Mohd Afzanizam also said that the US Dollar Index (DXY) was seen declining from a high of 109.878 points to 108.404 points last night as the trade war was momentarily averted.
However, he noted that data from the latest survey showed that business sentiment in the US manufacturing sector improved in January 2025.
“The Institute for Supply Management Index for the manufacturing sector rose to 50.9 points in January after remaining below the 50-point demarcation line for 26 months straight.
“The sub-indices, such as New Orders, have also remained above the 50-point mark for three consecutive months, indicating that manufacturing sectors are becoming increasingly busy fulfilling customer orders,” he noted.
He added that the market is expected to remain focused on tariff developments, with China being the next key concern regarding potential concessions. Hence, he expects the ringgit to strengthen today.
Meanwhile, the ringgit traded mostly lower against major currencies.
The local note edged higher against the Japanese yen to 2.8660/8792 from Monday’s 2.8838/8898. However, it depreciated vis-a-vis the euro to 4.5969/6175 from 4.5747/5839 yesterday, and fell against the British pound to 5.5340/5589 from 5.4966/5077 previously.
The local note also traded mostly lower against ASEAN currencies.
It rose against the Philippine peso to 7.58/7.62 from 7.62/7.64 on Monday, slid versus the Singapore dollar to 3.2725/2877 from 3.2709/2777, was lower vis-a-vis the Thai baht at 13.1424/2131 from 13.1345/1687, and slipped against the Indonesian rupiah at 270.5/271.9 compared to 271.1/272.5 previously. – February 4, 2025