KUALA LUMPUR – The Malaysian ringgit will continue to be “market determined” and be closely monitored by Bank Negara Malaysia (BNM), the central bank reiterated.
According to a recent statement, BNM stated that it will continue to closely monitor and maintain orderly financial market conditions despite external developments that have led to the continued strength of the U.S. dollar relative to nearly all currencies, which includes the Malaysian ringgit.
The statement said that the “ringgit’s movements will continue to be market determined and the foreign exchange market will continue to function and intermediate effectively”.
As of Sept 23, BNM reports that the daily onshore forex transaction volume has increased to an average of US$13.3 billion from the previously recorded US$11.3 billion last year, due to the two-way flows.
Furthermore, the central bank added that the bond market remains healthy, due to the support of institutional investors and financial institutions.
Due to the recent announcement of the US Federal Reserve further tightening its monetary policy in its country, the greenback had strengthened significantly against numerous other currencies.
To date (Sept 23), the Malaysian ringgit declined to 4.5670/5710 against the US dollar, compared to the 4.5660/5695 that was marked during the close on Sept 22.
Tan Sri Nor Shamsiah Mohd Yunus, BNM’s governor, had remarked that Malaysia is still an open economy and instead of resorting to capital controls or re-pegging, the policy must now be prioritised in order to sustain economic growth in an environment of price stability to ensure the fundamentals of the domestic economy are bolstered through structural reforms.
“This will create a more enduring support for the Malaysian ringgit,” she said.
Additionally, the central bank stated that tighter global financial conditions and greater volatility in foreign exchange markets were not anticipated to impede Malaysia’s economic expansion.
The country’s economy had an 8.9% growth in the second quarter of 2022 which will continue through improved labour market conditions and increased tourism activity. Furthermore, the nation’s exports were also supported by the diverse products and markets, the statement added.
“The domestic financial sector is adequately capitalised and has ample liquidity, and financial intermediation continues to support the economy,” BNM stated.
The statement further added that its market operations will provide adequate liquidity and the orderly operation of the financial markets.
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