File pic - Photographer: Samsul Said/Bloomberg
KUALA LUMPUR: Domestic financial market conditions have remained orderly despite heightened volatility in global financial markets during the second and third quarters of 2024, according to Bank Negara Malaysia (BNM).
Shifting investor expectations around major central banks’ monetary policy decisions contributed to this volatility, the central bank said, adding that the ringgit continued to be primarily influenced by external developments.
"Since the beginning of 2024, the ringgit has appreciated by 11.4 per cent against the US dollar as at Sept 30, 2024.
"Positive economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage foreign exchange flows, will continue to support the ringgit,” BNM said in its Financial Stability Review for the First Half of 2024 (FSR 1H 2024) today.
The central bank highlighted that business resilience should further improve in the second half of 2024 in line with the projected sustained expansion in economic activity, while input costs should ease amid lower commodity prices and the appreciating ringgit.
Deputy Governor Jessica Chew stated that BNM continues to raise the standards for financial institutions in response to emerging risks, particularly in managing risks posed by third-party service providers.
"The strong buffers maintained by banks, insurers, and takaful operators will continue to preserve the resilience of financial institutions against unexpected losses,” she added.
As of end-June 2024, the banking system’s aggregate total capital ratio stood at 18.4 per cent, with capital buffers of RM136.1 billion in excess of the regulatory minimum.
"Similarly, the insurance and takaful sectors remained resilient, with an aggregate capital adequacy ratio of 227 per cent and excess capital buffers of RM37.4 billion. This will enable them to continue meeting households' and businesses' financing and protection needs as economic activities expand,” BNM said.
The central bank also shared that household resilience continued to be supported by favourable economic and labour market conditions.
The ratio of household debt-to-GDP has remained broadly unchanged at 83.8 per cent as household debt grew in line with the pace of economic activity, it added. - Bernama
