KUALA LUMPUR (Jan 17): Bank Negara Malaysia’s (BNM) measures taken are bearing fruit in terms of stabilising the foreign exchange market so far.
The exchange rate volatility has declined with average ringgit intraday movement narrowing to around 61 points from an average of 82 points in December last year, according to the central bank.
“The difference between the buying and selling rates has also narrowed noticeably to 20 points in January, reducing the foreign exchange transaction cost,” BNM said in a statement issued this evening.
“The ringgit level could further stabilise with the continued rebalancing of demand and supply of the ringgit and the adverse influences from the NDF market being further reduced,” the statement said.
The central bank pointed out that the onshore foreign exchange (FX) market continued to see healthy activities, recording a daily average volume of US$9.2 billion across all types of FX transactions, thanks to the measures taken by the Financial Markets Committee (FMC).
It said the daily average volume for onshore spot and forward market transactions particularly for the ringgit currency pair has been above US$2 billion, similar to the level recorded in December 2016, while the transactions volume in the ringgit non-deliverable forward (NDF) market continues to shrink.
Amid the global uncertainties and US developments, the ringgit has been stable as the markets anticipate policy details by the incoming Trump administration, it noted.
Meanwhile, for the trade sector, BNM noted that a total of US$10.7 billion of foreign exchange transaction in relation to exports and imports of goods with a daily average of US$1.1 billion took place between Jan 1 and Jan 16, whereas the percentage of export proceeds conversion continues to increase.
BNM also mentioned that the reduced exchange rate volatility and the narrowing of the spread between buying and selling rate have lowered the transaction cost of conversion.
“The continuous engagement with stakeholders, particularly the corporations and exporters, by BNM has resulted in a decline in the number of queries received on the initiatives and its implementation,” it said.
Since the announcement of the new measures, BNM said 1,500 queries were received and 84% have been responded to while the remaining cases will be resolved soon, it added.
BNM added that two additional fund managers have registered with it since the last update with total assets under management (AUM) eligible under the framework increasing to RM44.4 billion.
It noted that BNM has also engaged two international financial market associations representing global fund managers and banks to provide clarity on the framework and to facilitate the registration and participation of their members in the onshore financial market.
Aimed to create a conducive and orderly financial market environment to facilitate business and economic activities, the statement said that BNM and FMC will continue to monitor the progress and garner feedback from the public on the initiatives and engage all stakeholders to ensure its successful implementation.
Established by BNM in May 2016, FMC is a committee which comprises representatives from the central bank, financial institutions, corporations, financial service providers and other institutions which have prominent roles or participation in the financial markets.