KUALA LUMPUR, June 24 — Bank Negara Malaysia (BNM) said it will step up efforts to support the ringgit, including measures to attract foreign funds and encourage state-linked firms and companies to repatriate overseas earnings.
In a statement today, the central bank said its Financial Markets Committee (FMC), which met to review the ringgit’s decline of more than 4 per cent so far this month, noted that Malaysia’s economic fundamentals remain strong and that the onshore foreign exchange market continues to function smoothly.
The central bank said the recent weakness in the ringgit was driven by cautious positioning among foreign investors and growing expectations of higher interest rates in the US, days after the local currency hit a seven-month low.
The FMC said global financial markets remain focused on rising prospects of higher US policy rates as elevated inflationary risks persist.
The committee also noted foreign investor outflows but said these largely reflected portfolio adjustments following the ringgit’s strong performance earlier this year.
Despite a 4.5 per cent decline in June, the ringgit remains down only about 2 per cent for the year, making it one of the better-performing currencies in emerging Asia.
“Non-resident investors are seen to be taking a neutral stance in their portfolio positioning,” the committee said.
“Looking ahead, external developments, as well as domestic factors, are expected to continue driving ringgit performance, but Malaysia’s solid economic profile will help provide enduring support to the currency.”
BNM did not elaborate on the specific measures under consideration but reiterated its commitment to ensuring orderly market conditions and supporting confidence in the domestic foreign exchange market.
