Stronger ringgit: Year-to-date, the ringgit has gained 2.05% against the US dollar, which makes the Malaysian currency one of the top performers in the region so far this year.
KUALA LUMPUR: The volatility in the ringgit against the US dollar has been sharply reduced over the past week as the Financial Markets Committee's (FMC) measures started to take effect on Dec 2.
The FMC said on Friday that for December, the average intraday movement of ringgit exchange rate declined to 68 points, being the difference between the daily highest and lowest exchange rate quoted in the interbank market.
This was in sharp contrast with the 228 points in November, it pointed out.
“The onshore forex market recorded daily average volume of US$8.3bil across all forex transactions as market adjusted to the new environment,” it said.
Since Monday, the onshore and offshore US dollar-ringgit non-deliverable forward market has returned to normalcy.
Last Friday, the FMC announced measures to broaden the domestic foreign exchange (forex) market and they came into effect on Monday, Dec 2.
The several measures to prop up the weakening ringgit included requiring companies to repatriate three-quarters of their earnings from exports back to Malaysia by converting them into ringgit.
Other measures to increase the demand for the ringgit included placing a cap on the amount that companies and individuals could invest locally or abroad in foreign currencies.
StarBiz reported that following the unexpected triumph of Donald Trump in the US presidential poll, the ringgit had weakened, with the implied yield of the one-month ringgit non-deliverable forwards (NDF) skyrocketing to 19.43% on Nov 11.
The FMC said on Friday: “Activities in bond market were also healthy with daily average volume of RM4.5bil. Government benchmark securities rallied by 17 basis points to 29 bps from Dec 1, 2016 levels,” it said.
It also said that an auction of 20-year MGII held during the week was well received with bid-to-cover ratio of 3.75 times with strong interest from financial institutions and insurance companies.
On the fund manager hedging framework, where registered domestic and foreign fund managers are able to actively manage up to 25% of their invested portfolio, FMC said a number of fund managers have approached Bank Negara Malaysia (BNM) with initial four submitted registrations.
“FMC, together with BNM, is currently carrying out engagement sessions with parties to gather feedback and arrangements are currently being made to further address the implementation issues.
“FMC will continue to monitor financial market development and look forward toward continuous engagement to ensure development of the onshore market in creating a better and conducive financial environment for all,” it said.
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