KUALA LUMPUR: The ringgit appreciated by 2.5 per cent against the US dollar in July 2024 in line with most regional currencies, according to Bank Negara Malaysia (BNM).
In its Monthly Highlights - July 2024 report today, the central bank said the currencies of Singapore, Thailand, Philippines, Indonesia and South Korea increased by an average of one per cent in July 2024.
It added that the 10-year Malaysian Government Securities (MGS) yield decreased by 14 basis points (bps) compared to the regional average of -25 bps, alongside a decline in US bond yields.
The FBM KLCI traded higher by 2.2 per cent versus the regional average of two per cent.
"Domestic financial markets were mostly driven by global developments, particularly shifting expectations over the United States (US) monetary policy path," it said.
The US Federal Reserve (Fed) officials expressed confidence that recent readings indicated progress towards their target inflation, suggesting a potential policy rate reduction may come as early as September 2024.
Consequently, financial market participants revised their 2024 US policy rate expectations to two to three cuts (June 2024: one to two cuts).
On credit growth to the private non-financial sector, BNM said this will be sustained at 5.5 per cent as at end-July 2024 (June 2024: 5.5 per cent), following higher outstanding loan growth of 6.2 per cent (June 2024: 6 per cent) while outstanding corporate bonds grew more moderately at three per cent (June 2024: 3.4 per cent).
For businesses, outstanding loan growth rose to six per cent (June 2024: 5.7 per cent), driven mainly by higher growth in working capital loans, particularly across the manufacturing and services sectors.
Investment-related loan growth remained forthcoming, it said.
Meanwhile, household loan growth was sustained at 6.2 per cent amid steady loan expansion for housing and car purchases.
BNM said loan applications were higher, reflecting household demand for financing.
On banks' liquidity and funding positions, the central bank said it remained supportive of intermediation activities as the banking system continued to record healthy liquidity buffers with an aggregate liquidity coverage ratio of 150.8 per cent (June 2024: 155.1 per cent).
The aggregate loan-to-fund ratio remained broadly stable at 83 per cent (June 2024: 82.8 per cent).
"The resilience of the banking system continued to be underpinned by sound asset quality, which saw overall gross and net impaired loans ratios stable at 1.6 per cent and one per cent, respectively," it said.
The loan loss coverage ratio, including regulatory reserves, continued to be at a prudent level of 124.5 per cent of impaired loans (June 2024: 124.1 per cent), with total provisions accounting for 1.4 per cent of total loans.
TAGS: BNM, Monthly Highlights, Ringgit, Banking