KUALA LUMPUR: The ringgit has remained broadly stable against the currencies of Malaysia's major trade partners, according to Bank Negara Malaysia governor Tan Sri Nor Shamsiah Mohd Yunus.
Nor Shamsiah said this was based on the nominal effective exchange rate (NEER) that had depreciated to 0.1 per cent during the second quarter (Q2) 2022.
"We depreciated the NEER by 0.1 per cent during the quarter, so we are moving in line with our trade partners. We cannot be much stronger than our trade partners.
"We are already in the environment of a strong United States (US) dollar. The US dollar continued to strengthen against ringgit and regional currencies.
"But when we look at our exchange rates against our trade partners, we remain broadly stable against major trade partners," she told reporters after a briefing on Malaysia's second quarter (Q2) gross domestic product (GDP) here today.
Nor Shamsiah said the magnitude of depreciation against the US dollar was not in any major currency.
"When we look even further against our trade partners, we are broadly stable.
"So we had to move away from our fixation of bilateral exchange rates and we need to look at it from a bigger perspective. Thus, one way is to look at our NEER," she said.
According to Nor Shamsiah, the ringgit depreciated by 4.6 per cent against the US dollar in the Q2 of 2022, broadly in line with the movement of regional currencies at 4.7 per cent.
She said this largely reflected the continued strengthening of the US dollar following aggressive US monetary policy tightening, increased investors' risk aversion due to the weaker global growth outlook and the military conflict in Ukraine.
Nonetheless, Nor Shamsiah said elevated commodity prices and Malaysia's economic recovery helped to cushion the downward impact from the external developments on the ringgit during the quarter.
"Going forward, while domestic financial markets will continue to be subjected to episodes of heightened volatility, spillovers to domestic financial intermediation are expected to remain broadly contained.
"This will be supported by Malaysia's healthy external position and strong banking system," she added.