KUALA LUMPUR: The ringgit opened higher against the US dollar on the first trading day of Budget 2025 week, buoyed by optimism that the government will likely maintain fiscal discipline and keep the fiscal deficit below four per cent of Gross Domestic Product growth next year.

At 8.05 am, the local currency strengthened to 4.2850/3010 against the greenback, up from Friday's close of 4.2865/2910.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said attention on Friday's budget announcement would drive market sentiment this week.

Commenting on global sentiment, he noted that China's Ministry of Finance briefing over the weekend lacked details. However, the commitment to reviving the economy, particularly the weak property market, remained visible.

"The markets were anticipating a larger fiscal stimulus to avert deflation. China's inflation rate was flat at 0.4 per cent in September, down from a 0.6 per cent rise in the previous month.

"Similarly, the core inflation rate was at 0.1 per cent, down from 0.3 per cent previously," he said.

Mohd Afzanizam said the situation in China appears to favour the US dollar, as the US economy is seen as more resilient, and the US Federal Reserve may avoid aggressive rate cuts.

The US Dollar Index (DXY) is currently hovering at 103.021 points.

"The last time the DXY was at 103 points was in August. Given this, the ringgit is likely to trade cautiously due to concerns over China's economy," he added.

Meanwhile, the ringgit was firmer against a basket of major currencies.

It was higher against the euro at 4.6784/6958 from 4.6886/6935 at Friday's close, marginally higher against the Japanese yen at 2.8701/8810 from last Friday's 2.8780/8812, and rose vis-a-vis the British pound to 5.5894/6102 from 5.6016/6075 previously.

However, the local note traded mixed against ASEAN currencies.

It strengthened vis-a-vis the Singapore dollar to 3.2788/2915 from 3.2824/2861, but declined against the Thai baht to 12.8741/9334 from 12.8504/8704 last Friday.

The ringgit was almost flat at 7.49/7.52 from 7.49/7.50 against the Philippine peso and was lower against the Indonesian rupiah at 275.0/276.1 from 275.1/275.5 on Friday.