KUALA LUMPUR: Bank Negara Malaysia’s (BNM) Financial Markets Committee (FMC) is actively monitoring domestic financial market conditions amidst significant global developments, including the recent US election results and concerns about China’s economic growth prospects. In a statement today, the FMC highlighted that these uncertainties have increased volatility in global and regional foreign exchange markets, including the ringgit.

According to BERNAMA News Agency, since early October, the ringgit has partially reversed some of its previous gains to 4.4792, mainly due to non-resident portfolio adjustments through hedging activities against the dollar’s broad strength. The FMC noted that the ringgit has continued to outperform other regional currencies and has maintained a positive performance against the US dollar for the year. The committee attributed this to investor confidence in the resilience of the domestic financial market, evidenced by US$1 billion in non-resident inflows into the bond market and US
$200 million into the equity market year-to-date.

The FMC also observed that conversions of export proceeds, income, and excess foreign currencies by resident investors and corporates have continued, aligning with underlying operational and investment needs. Despite recent increases in volatility, the FMC reported that the ringgit’s year-to-date average one-month implied volatility remains manageable at 4.5 per cent compared with 5.3 per cent in 2023 and the regional average of 6.0 per cent. The foreign exchange market remains orderly, with ample liquidity and a robust average daily trading volume of US$17.6 billion.

The committee welcomed BNM’s ongoing coordinated efforts to encourage more consistent inflows by government-linked companies and government-linked investment companies, as well as increased engagements with Malaysian corporates and businesses. It also highlighted BNM’s expansion of the Qualified Resident Investor programme, offering flexibility for resident corporates to reinvest abroad after r
epatriating foreign funds.

The FMC expressed a positive view of Malaysia’s strong economic fundamentals and growth prospects, which it believes will further enhance the financial market’s resilience against external shocks. BNM stands ready to manage market volatility and ensure orderly market functioning, the FMC added.