KUALA LUMPUR: The ringgit is on a positive trajectory, signalling a recovery from past performances, according to Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour.
"I believe the recent spread in ringgit performance indicates a recovery. It is moving in the right direction in terms of being more reflective of the nation's fundamentals and the economy's strong prospects," he told a press conference on the second quarter of 2024 (Q2 2024) gross domestic product (GDP) here today.
However, Abdul Rasheed said the current level of the ringgit was not yet where the central bank would consider comfortable.
"In terms of whether we have a comfortable level for the ringgit, we don't. I think there's something particular about the ringgit. It is undervalued. But of course, what we have seen in terms of the support for ringgit is positive," he added.
According to Abdul Rasheed, the ringgit had appreciated by 3.1 per cent against the US dollar as at Aug 13.
On a nominal effective exchange rate (NEER) basis, he said the ringgit appreciated by 5.3 per cent.
"This was in part due to growing expectations among financial market participants on US policy rate cuts, which has alleviated pressure on regional currencies, including the ringgit," he said.
Moving forward, Abdul Rasheed said the coordinated initiatives by the government and Bank Negara with the government-linked companies and government-linked investment companies, alongside engagements with corporates, exporters and investors, continue to provide support to the ringgit.
"These efforts have resulted in greater and more consistent flows into the foreign exchange market," he added.
The daily average foreign exchange (FX) trading volume had risen to US$18.0 billion during the period of Feb 26 to Aug 13.
The bid-ask spread is also narrower, indicating improved liquidity in the domestic FX market.