Malaysia's removal from US currency watch list affirms ringgit's market -driven status

The Star

Bank Negara Malaysia (BNM) welcomed Malaysia’s removal from a US currency manipulation watch list, affirming the ringgit’s market-driven status.  Governor Datuk Seri Abdul Rasheed Ghaffour stressed that Malaysia has never used its exchange rate to gain a competitive advantage in the market.  He said during Friday's (Nov 19) third quarter (3Q) 2024 gross domestic product (GDP) press conference.   WATCH MORE: https://thestartv.com/c/news SUBSCRIBE: https://cutt.ly/TheStar LIKE: https://fb.com/TheStarOnline

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00:00In terms of Ringgit outlook moving forward, notwithstanding the recent financial market

00:05volatility following the US presidential election knockout, the Ringgit is expected to be supported

00:12by the narrowing interest rate differentials between the US and Malaysia.

00:17Additionally, the strong domestic growth and ongoing reforms momentum could also provide

00:23further tailwinds for the Ringgit.

00:26Amid global risks arising from a more gradual reduction in the US policy rate, geopolitical

00:33tensions and policy uncertainty post-US election, Bank Negara Malaysia will continue to ensure

00:40a better balance of flows and orderly adjustments in the Ringgit.

00:45So Bank Negara had wanted Malaysian businesses to repatriate their earnings from abroad and

00:51to convert it to Ringgit rather than hold it in USD.

00:56Have our businesses taken BNM's advice and also, it's a two-part question, so any numbers

01:02that BNM can share on that?

01:05Has it led to a recent appreciation of the Ringgit against the USD?

01:11And then my second question is, is the government comfortable with the current level of the

01:17Ringgit?

01:18Has the appreciation brought any impact, positive or negative?

01:22If so, what are they?

01:24Is Bank Negara looking at intervening with the Ringgit actually going up quite significantly

01:31in the last couple of weeks?

01:33Maybe I'll go with the questions first.

01:37First, Joe, thanks for the question.

01:39In terms of our efforts with regard to encourage businesses to repatriate their export earnings

01:49and convert them to Ringgit, and also in terms of encouraging investors to bring back

01:53income and convert them to Ringgit, that has yielded positive outcomes, I have to say.

01:58If you look in terms of where the Ringgit was, for example, Ringgit depreciated by 10%

02:07this year when we started between 26 February to 20 October.

02:12And in terms of the nominal effective exchange rate, that also depreciated by 9.8%.

02:18And one more is that in terms of, if you look at the average daily forex turnover,

02:24it has increased from 15 billion to 18 billion.

02:28And we have seen a healthy two-way flow in the market.

02:31And we have also seen in terms of appreciation in the Ringgit itself.

02:33So that has definitely benefitted the Ringgit.

02:39In terms of level of Ringgit, it's not about the targeted level or certain level, but what's

02:45more important is that in terms of it should be reflective of the fundamentals of the Malaysian

02:50economy, it should be reflective of the prospect of the Malaysian economy.

02:54So what we have seen is that with the changes in the policy shifts, monetary policy shifts

03:01in the advanced economy, particularly in the US, we have seen the Ringgit depreciating.

03:07And added with the tailwind that we have in terms of the fundamentals that we have, in

03:12terms of the strong prospects of growth that we have seen, and also coupled with the reform

03:19measures that has been undertaken by the government.

03:22So this has actually provided good support for the Ringgit.

03:26There is a report that says that the US has removed us from the watch list.

03:33What is the view of the country?

03:37Yes, I think we welcome this development in terms of we have been removed from the currency

03:41manipulator watch list, and I think just to highlight that this shows that Ringgit

03:48has always been a market-determined currency, and we never use exchange rate to gain competitiveness

03:55in the market.

03:56So this is something that affirms our belief and affirms our position on this matter.

04:02It's a welcome development.

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