KUALA LUMPUR: Bank Negara Malaysia’s (BNM) Financial Markets Committee (FMC) continues to monitor the domestic financial market conditions amidst key global developments, namely the outcome of the recent US election and concerns surrounding China’s economic growth prospects.
In a statement today, the FMC said the ensuing uncertainties have heightened volatility in global and regional foreign exchange markets, including the ringgit.
Since early October, it said the ringgit has pared some of its earlier gains to 4.4792, primarily driven by non-resident portfolio adjustments through hedging activities against broad dollar strength.
"The FMC noted that the ringgit continues to outperform other regional currencies and maintain positive performance against the US dollar for the year.
"Key observations that support the positive performance of the ringgit include investor confidence in the resilience of the domestic financial market remains firm, evidenced by US$1 billion in non-resident inflows into the bond market and US$200 million into the equity market year-to-date,” it added.
The FMC also noted that conversions of export proceeds, income and excess foreign currencies by resident investors and corporates have continued, consistent with underlying operational and investment needs.
Despite recent increases in volatility, it noted that the ringgit’s year-to-date average one-month implied volatility remains manageable at 4.5 per cent compared with 5.3 per cent in 2023 and the regional average of 6.0 per cent.
"The foreign exchange market remains orderly, with ample liquidity and a robust average daily trading volume of US$17.6 billion,” it said.
The FMC welcomed BNM’s continued coordinated efforts to encourage more consistent inflows by the government-linked companies and government-linked investment companies, as well as greater engagements with Malaysian corporates and businesses.
It highlighted that BNM has expanded the Qualified Resident Investor programme, offering flexibility for resident corporates to reinvest abroad after repatriating foreign funds.
"The FMC viewed positively that Malaysia’s strong economic fundamentals and growth prospects further enhance the financial market’s resilience against external shocks.
"In this regard, BNM stands ready to manage market volatility and ensure orderly market functioning,” it added. - Bernama
