Onshore forex market hits RM40b daily average volume

Bank Negara says financial markets continue to see healthy activities

PETALING JAYA: Financial markets continue to see healthy activities, with the onshore foreign exchange (forex) market recording a daily average volume of US$9.2bil (RM40.48bil) across all types of forex transactions, said Bank Negara.

The daily average volume for onshore spot and forward market transactions particularly for ringgit currency pair has been above US$2bil (RM8.8bil), similar to the level recorded in December 2016.

Meanwhile, the transaction volume in the ringgit non-deliverable forward (NDF) market continues to shrink, said the Bank Negara Financial Markets Committee (FMC) in a statement yesterday.

“The ringgit has been stable amidst global uncertainties and developments in the United States, as markets anticipate policy details by the incoming Trump administration.

“The exchange rate volatility declined with the average ringgit intraday movement narrowing to around 61 points from an average of 82 points in December last year,” said Bank Negara.

Bank Negara pointed out that the difference between the buying and selling rates had also narrowed noticeably to 20 points in January, reducing the forex transaction cost.

“The ringgit level could further stabilise with the continued rebalancing of the demand and supply of the ringgit and the adverse influences from the NDF market being further reduced,” it said.

For the trade sector, Bank Negara said a total of US$10.7bil (RM47.08bil) of forex transactions in relation to the export and import of goods with a daily average of US$1.1bil (RM4.84bil) took place during the period of Jan 1 to Jan 16.

It said that the percentage of export proceeds conversion continues to increase. For the economy at large, the reduced exchange rate volatility and the narrowing of the spread between the buying and selling rate has lowered the transaction cost of conversion.

The continuous engagement with stakeholders, particularly the corporations and exporters, by Bank Negara has resulted in a decline in the number of queries received on the initiatives and its implementation, it said.

Since the announcement of the new measures, 1,500 queries were received, of these 84% have been responded to. The remaining cases will be resolved soon.

For the fund manager hedging framework, two additional fund managers have registered with Bank Negara since the last update, with the total assets under management eligible under the framework increasing to RM44.4bil.

Bank Negara has also engaged two international financial market associations representing global fund managers and banks to provide clarity on the framework. It will facilitate the registration and participation of their members in the onshore financial market.

Bank Negara and FMC will continue to monitor the progress and garner feedback from the public on the initiatives and engage all stakeholders to ensure its successful implementation.

This is aimed at creating a conducive and orderly financial market environment to facilitate business and economic activities.