27-6-2023 (KUALA LUMPUR) The central bank of Malaysia announced on Tuesday its plan to intervene in the foreign exchange market in order to stabilize the country’s currency, the ringgit. The move comes as the ringgit faces significant losses, trading near a seven-month low and experiencing a decline of nearly 6% against the US dollar this year, which is greater than other currencies in Southeast Asia.
Bank Negara Malaysia stated that the recent depreciation of the ringgit was not aligned with economic fundamentals and that the volatility in its value was disproportionately higher compared to historical trends. Assistant Governor Adnan Zaylani emphasized that the central bank would take action to prevent excessive currency movements as part of its statutory mandate. However, he also noted that the value of the ringgit would continue to be determined by market forces.
The government’s ongoing efforts to strengthen Malaysia’s export-driven economy are expected to contribute to a more accurate reflection of the country’s economic fundamentals in the value of the ringgit. Additionally, the central bank highlighted that clarity on the interest rate policies of the US Federal Reserve and further stimulus measures implemented by China, Malaysia’s largest trading partner, could provide support to the ringgit.
Earlier this month, Malaysia’s finance ministry announced the implementation of structural policies aimed at attracting more funds and foreign investments, which would ultimately bolster the ringgit. The central bank’s intervention, combined with these initiatives, seeks to restore stability and enhance the resilience of Malaysia’s currency.
