KUALA LUMPUR: The Financial Markets Committee (FMC) said the ringgit has pared some of its earlier gains since early October to 4.4792, primarily driven by non-resident portfolio adjustments.
This was done through hedging activities against broad dollar.
"The FMC noted that the ringgit continues to outperform other regional currencies and maintain positive performance against the US dollar for the year," BNM said in the statement.
The FMC said key observations that support the positive performance of the ringgit includes investor confidence in the resilience of the domestic financial market remains firm, evidenced by US$1 billion in non-resident inflows into the bond market and US$200 million into the equity market year-to-date.
It added that the conversion of export proceeds, income and excess foreign currencies by resident investors and corporates have continued, consistent with underlying operational and investment needs.
"Despite recent increases in volatility, the ringgit's year-to-date average one-month implied volatility remains manageable at 4.5 per cent (2023: 5.3 per cent), compared to the regional average of 6.0 per cent."
"The foreign exchange market remains orderly, with ample liquidity and a robust average daily trading volume of US$17.6 billion," it said.
The FMC was established by BNM in May 2016 and comprises representatives from Bank Negara Malaysia (BNM), financial institutions, corporations, financial service providers and other institutions.
The FMC welcomed its continued coordinated efforts to encourage more consistent inflows by the government-linked companies (GLCs) and government-linked investment companies (GLICs), as well as greater engagements with Malaysian corporates and businesses. BNM has also expanded the Qualified Resident Investor (QRI) program, offering flexibility for resident corporates to reinvest abroad after repatriating foreign funds.
These measures are expected to support sustained inflows and domestic market liquidity.
Furthermore, it said the FMC also welcomed the liberalisation of foreign exchange policy (FEP) for Multilateral Development Banks (MDBs) and non-resident development financial institutions (DFIs) to support investments in Malaysia.
FMC said it continues to monitor the domestic financial market conditions amidst key global developments namely the US election outcome and concerns surrounding China's economic growth prospects.
"The FMC viewed positively that Malaysia's strong economic fundamentals and growth prospects further enhance the financial market's resilience against external shocks."
"In this regard, BNM stands ready to manage market volatility and ensure orderly market functioning," it noted.