Bank Negara Malaysia said it will be ready to smooth any excessive volatility in the ringgit and that markets should look beyond “short-term currency dynamics”.
“BNM remains vigilant and stands ready to provide liquidity as needed,” the central bank said in an emailed statement to Bloomberg News. “Malaysia’s strong fundamentals, positive economic prospects and domestic structural reforms, complemented by ongoing initiatives to encourage flows, will continue to provide enduring support to the ringgit.”
The ringgit fell 5.8% against the dollar in October, its biggest monthly drop in about eight years, as traders reassessed the pace of US Federal Reserve interest rate cuts and avoided riskier assets in the run-up to the US election.
The currency remains the best performer across emerging markets this year as economic growth surpassed analysts’ estimates, driven by domestic demand and investments from tech giants. The government also plans to end blanket subsidies for fuel to reduce its budget deficit.
Malaysia’s policymakers have this year encouraged state-linked firms, funds as well as companies in the private sector to repatriate their overseas income to help shore up the currency, helping it to rebound from a 26-year-low reached in February.
“As Malaysia is a small and open economy, the ringgit will continue to be subject to global financial market developments and short-term foreign exchange market dynamics,” the central bank said. “Our presence in the foreign exchange market is to manage excessive volatility in the exchange rate and ensure orderly market conditions.”
