PETALING JAYA: Despite recent pressure on the ringgit from global developments due to foreign portfolio adjustments, Malaysia’s onshore foreign-exchange (forex) market remains healthy.
According to a statement released by the Financial Markets Committee (FMC), the ringgit underwent a market correction this month, declining against the US dollar.
The FMC said the move was partly attributable to non-resident investors adopting a cautious stance ahead of the state elections, prompting portfolio adjustments following the ringgit’s strong performance earlier in the year.
The FMC also said the ringgit was pressured by an increase in hedging activity amid the US dollar strengthening and foreign fund rebalancing following the removal of six Malaysian stocks from the MSCI Malaysia Index.
Although concerns over the US-Iran conflict have eased, the FMC said investors remain focused on the likelihood that US interest rates will stay high amid inflation risks. This has kept the US dollar strong, weighing on currencies such as the ringgit.
