Ringgit appreciated 1.5% against US dollar year-to-date, says BNM

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KUALA LUMPUR (Feb 14): The ringgit posted a better performance year-to-date, appreciating 1.5 per cent against the US dollar, although a dim outlook is expected going forward as external currencies will continue to weigh on the ringgit’s performance.

Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus explained that the ringgit depreciated by 1.8 per cent against the greenback in 2018, in line with most regional currencies.

“The ringgit’s depreciation was less against the US dollar compared to most regional currencies,” she said during the announcement of the country’s fourth-quarter (4Q) Gross Domestic Product (GDP) 2018 performance here today.

Shamsiah noted that uncertainties surrounding US monetary policy normalisation as well as the softening global growth outlook are among the factors that would impact the ringgit’s performance.

Commenting on the external debt, she said that as at the end of 4Q18, the country’s external debt consisted of 44 per cent short-term debt and 56 per cent medium- to long-term debt.

“Close to a third of external debt is denominated in the ringgit, whereby 31 per cent of the country’s debt is ringgit-denominated, whilst the remaining 69 per cent is foreign currency-denominated debt,” she said.

Shamsiah said Malaysia’s reserves are adequate and the country has sufficient foreign currency-liquid assets to meet external debt obligations.

“Look at the country’s total reserves, and we have centralised reserves with BNM as well as decentralised reserves.

“We have also embarked on measures to utilise our foreign exchange, and this, coupled with total cumulative reserves for the nation, our foreign currency asset is enough to buffer the impact of a weaker ringgit,” she said.

The country’s foreign-currency denominated external debt in 4Q18 comprised 31.6 per cent interbank borrowings, resident deposits (7.3 per cent), intercompany loans (16 per cent), trade credits (eight per cent), bonds and notes (24 per cent) and others (13 per cent).