Bank group supports steps to stabilise ringgit

At 9.03 am(0103gmt), the local unit's onshore trading was at 4.3380/3500 against the greenback from 4.3340/3390 on Tuesday.

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) sees the new measures introduced by the Financial Markets Committee (FMC) to stabilise the ringgit will ultimately benefit all the real sectors of the economy. 

ABM said on Thursday the measures were for the longer term development of the onshore market and will result in less volatility of the ringgit against major currencies, especially against the US dollar, which is presently the main currency for the country’s trade. 

“The action taken would benefit manufactures and traders in the long term as they would not be distracted by the exchange rate volatility. 

“While there will be some initial adjustments to the new measures, overall, there will be greater stability to the movements of the ringgit which will ultimately benefit all the real sectors of the economy,” it said. 

Last Friday, the FMC announced measures to broaden the domestic foreign exchange (forex) market in a move to improve liquidity. These measures came into effect on Monday.

FMC said under the new measures, 75% of all new export proceeds will have to be converted into ringgit. Also payment by resident exporters for settlement of domestic trade in goods and services is now to be made fully in ringgit. 

Exporters are also able to hedge and unhedge up to six months of their foreign currency needs under the new measures.

Since Monday, the  onshore and offshore ringgit non-deliverable forward  (NDF) market has returned to normalcy.

At midday, the ringgit was quoted at 4.4323 to the US dollar, a sharp improvement compared with 4.4528 last Friday.

Meanwhile, ABM had on Friday refuted reports that banks are benefitting from the recent measures to increase the demand for ringgit. 

“Bank customers are encouraged to shop around for the banks which best meet their needs in terms of pricing, services and other considerations,” it said.