The Malaysian central bank emphasized on Wednesday that the Malaysian ringgit’s current undervaluation doesn’t accurately reflect the country’s robust economic fundamentals and promising prospects.
In its 2023 second-half Financial Stability Review report, Bank Negara Malaysia (BNM) highlighted that financial markets anticipate a stronger performance of the ringgit as external pressures ease.
BNM outlined concerted efforts from the government, BNM, government-linked companies (GLCs), and government-linked investment companies (GLICs) to bolster foreign exchange market liquidity continuously. These efforts aim to maintain orderly conditions and bolster support for the ringgit while fostering more consistent repatriation and conversion of foreign investment income by various stakeholders.
The report also underlined the government’s ongoing structural reforms geared towards enhancing Malaysia’s productivity and competitiveness, which are expected to offer sustained backing to the ringgit in the medium term.
Despite these measures, the ringgit has depreciated by 1.8 percent against the U.S. dollar since the start of 2024. This depreciation is primarily attributed to the broader strength of the U.S. dollar, as markets adjusted their expectations regarding federal funds rate (FFR) cuts, alongside uncertainties surrounding global growth prospects.
