KUALA LUMPUR: The ringgit extended its gains to open firmer against the US dollar on Friday, driven by the growing prospect of an interest rate cut amid softer United States (US) inflation data releases, an analyst said.

At 9 am, the ringgit strengthened to 4.6690/6740 against the US dollar from Thursday's close of 4.6855/6895.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that US headline and core inflation came in lower than expected at 3.0 per cent and 3.3 per cent respectively in June, against consensus estimates of 3.1 per cent and 3.4 per cent.

"Such an outcome has strengthened the case for an interest rate cut in the US, which is expected to occur as soon as September.

"By extension, the US Dollar Index (DXY) declined by 0.58 per cent to 104.44 points as prospects for a rate cut have gained momentum," he told Bernama, adding that the ringgit is on track for further appreciation, albeit moderately, today.

Mohd Afzanizam also noted that Bank Negara Malaysia's decision to maintain the Overnight Policy Rate (OPR) at 3.00 per cent is supportive of the ringgit, as it reduces the interest rate differential with the US Federal Funds Rate.

Meanwhile, the ringgit traded mostly higher against other major currencies.

It weakened against the Japanese yen to 2.9343/9378 from Thursday's close of 2.9003/9030, but strengthened against the euro to 5.0752/0806 from 5.0819/0862 yesterday, and appreciated against the British pound to 6.0285/0375 from 6.0335/0387 previously.

Similarly, the ringgit mostly gained against ASEAN currencies.

It edged up against the Singapore dollar to 3.4755/4795 from 3.4774/4807 yesterday and strengthened against the Indonesian rupiah to 288.2/288.7 from 289.2/289.7 previously.

The local unit improved against the Philippine peso to 8.01/8.03 from 8.03/8.05 on Thursday but depreciated against the Thai baht to 12.9199/9391 from 12.9184/9341.

 -BERNAMA