Recent currency depreciation not limited to ringgit alone - Bank Negara

Most world currencies are depreciating against the US dollar and the issue is not unique to ringgit alone, said Bank Negara Malaysia (BNM).

“Ongoing developments in global financial markets have weighed down on market sentiment. These include the US debt ceiling impasse and episodes of stress in the US and European banking sectors.

“This has led to an increase in demand for safe-haven assets such as the US dollar and outflows from most emerging market economies as investors seek to protect their investments.

“Against this backdrop, the US dollar has strengthened against most currencies,” said BNM, according to Bernama.

The movement of the ringgit was relatively muted when compared to other major trading partners, added BNM.

At the time of writing, the US dollar had risen to RM4.60, up from RM4.46 a month ago. Similarly, the Singapore dollar had risen to RM3.40, up from RM3.34 within the same period.

In view of this, the central bank said that the ringgit’s performance against the US dollar, or any other currency, was not a reflection of the state of the economy.

“Malaysia’s economy is expected to continue expanding within the range of four to five percent this year.

“Domestic demand will continue to drive growth, supported by the continued recovery in the labour market and the realisation of approved multi-year investment and capital projects, including approved foreign direct investments, such as the East Coast Rail Link (ECRL), LRT Shah Alam Line or LRT 3, and Pan Borneo Highway.

“At the same time, Malaysia’s diversified export markets and product segments will continue to support the resiliency of the external sector," said BNM.

The central bank said it will continue to manage the risks arising from heightened financial market volatility by ensuring sufficient liquidity and orderly functioning of financial markets.

“The ringgit’s performance should improve as uncertainties from global market developments subside. This in turn will better reflect Malaysia’s sound economic fundamentals,” said BNM. - Mkini