KUALA LUMPUR – Encouragement of Government-Linked Companies (GLCs) and Government-Linked Investment Companies (GLICs) to repatriate and convert foreign investment earnings into ringgit consistently will aid in improving the value of the currency, Bank Negara Malaysia (BNM) said.
In its Annual Report for 2023, the central bank said it has been actively engaging with stakeholders to closely monitor foreign exchange activities, as global investors shifted towards US dollar-denominated assets, anticipating sustained high interest rates in the US.
“We also closely monitored the conversion of export proceeds to ringgit by the large resident exporters,” BNM said in the report.
BNM said it has embarked on a series of proactive measures aimed at stabilising the ringgit amidst persistent challenges posed by global economic uncertainties.
The central bank said the ringgit faced depreciation pressures against the US dollar and other major trading currencies, largely influenced by factors beyond Malaysia’s borders.
In response to these challenges, BNM has intensified its efforts to mitigate volatility in the ringgit exchange rate.
“We continued to deepen the foreign exchange market through ongoing efforts by BNM’s Financial Markets Committee and banks operating in Malaysia, thus enabling businesses to meet their funding needs more effectively,” it said in the report released today.
“We also continued to promote access to hedging instruments for businesses to better manage their foreign exchange risks.”
These measures reflect BNM’s commitment to providing necessary support and ensuring adequate liquidity in the foreign exchange market.
BNM said these initiatives are expected to bolster sustained inflows and contribute to a more stable ringgit.
“The ongoing structural reforms should bring in more investment flows into Malaysia, and thus provide more enduring support for the ringgit in the long run,” BNM said. – March 20, 2024