Adnan Zaylani, assistant governor of the National Bank (BNM), asserts that the recent depreciation of the Malaysian Ringgit (MYR) does not accurately reflect the fundamentals of the nation’s economy. To avoid the MYR from experiencing undue volatility, the central bank plans to interfere in the foreign exchange market.
The Financial Markets Committee (FMC) met to evaluate recent financial market movements that have impacted the MYR exchange rate, according to a statement from BNM.
The statement emphasizes that external factors, particularly the rising interest rates in most major nations, have had a substantial impact on the recent movement of the currency. This raises the probability and risk of a large global economic slowdown.
Impacted by global developments
Indications that China is entering a post-pandemic era are mentioned in the statement, but the country’s economic recovery is stalling. The MYR and other local currencies have been impacted by the People’s Bank of China (PBOC) measures, such as interest rate reductions.
“Against the backdrop of a strengthening US dollar, the FMC observes that the recent depreciation of the MYR no longer reflects the country’s economic fundamentals.”
While the market will continue to determine the value of the MYR, Adnan Zaylani stated that BNM anticipates the government’s continuous efforts to boost the economy to ensure that the MYR more accurately reflects the fundamentals of the nation.
He said that although the predicted 4% to 5% economic growth, structural changes, and government initiatives to enhance fiscal management support the MYR, it is still subject to the effects of global developments.
