KUALA LUMPUR: Bank Negara Malaysia expects the ringgit to remain resilient, supported by narrowing interest rate differentials between Malaysia and the United States.
Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour said the strong domestic growth and ongoing reforms momentum could provide further tailwinds for the ringgit, despite recent volatility in financial markets following the US presidential election.
"Amid global risks arising from a more gradual reduction in the US policy rate, geopolitical tensions and policy uncertainty post-US election, Bank Negara will continue to ensure a better balance of flows and orderly adjustments in the ringgit," Abdul Rasheed told a press conference here today.
When asked if Bank Negara has been intervening in the market as the ringgit drops to 4.487 to the US dollar, Abdul Rasheed said the ringgit's movement should reflect the fundamentals of the nation's economy.
"So what we have seen is that with the changes in the policy shifts, not only policy shifts in the advanced economy, particularly in the US, this has led to the ringgit depreciation.
"With the strong economic growth that we have seen, coupled with the reform measures that have been taken by the government, this has actually provided good support for the ringgit. And we believe this will continue to be positive for the ringgit," he said.
The ringgit rose 14.9 per cent in the third quarter (Q3) and 3.1 per cent year-to-date as at November 13 against the US dollar.
Abdul Rasheed said the ringgit's performance in Q3 was mainly driven by the US Federal Reserve's (Fed) shift towards a monetary policy easing stance, including the cumulative 75-basis points federal funds rate cut in September and November.
"Financial market participants also expect further rate cuts by the US Fed moving into 2025," he said.
On the domestic front, Abdul Rasheed said investor confidence in Malaysia's growth prospects has been bolstered by the government's implementation of structural reforms.
Meanwhile, he said the ongoing coordinated efforts by the government and Bank Negara continue to provide support for the ringgit during the quarter.
'This includes the pilot Qualified Resident Investor (QRI) programme which provides foreign exchange flexibility to encourage resident corporates to bring back foreign currency funds and convert into ringgit.
"In light of the positive feedback received on the QRI programme, we are pleased to announce that the pilot programme will be further expanded to accept applications from eligible resident corporates who have direct investment abroad assets of RM500 million and above (previously RM1 billion), with the registration deadline extended until June 30, 2025," he added.