KUALA LUMPUR (Jan 25): The ringgit appreciated to its strongest point against the US dollar so far today at 3.8890 after Bank Negara Malaysia increased the overnight policy rate (OPR) by 25 basis points to 3.25%.

At 4:25pm, the ringgit was traded at 3.8985 versus the US dollar. The exchange rate so far today was between 3.8890 and 3.9075. Over the last one year, the exchange rate was between 3.8890 and 4.4618.

Bank Negara said in its monetary policy statement today that the strengthening ringgit reflects Malaysia's economic fundamentals.

"The domestic financial markets have been resilient. The ringgit has strengthened to better reflect the economic fundamentals. Banking system liquidity remains sufficient with financial institutions continuing to operate with strong capital and liquidity buffers. The growth of financing to the private sector has been sustained and is supportive of economic activity.

"With the economy firmly on a steady growth path, the MPC (monetary policy committee) decided to normalise the degree of monetary accommodation. At the same time, the MPC recognises the need to pre-emptively ensure that the stance of monetary policy is appropriate to prevent the build-up of risks that could arise from interest rates being too low for a prolonged period of time. At the current level of the OPR, the stance of monetary policy remains accommodative. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation," Bank Negara said.