BNM intervention props up ringgit despite stronger greenback

 

KUALA LUMPUR: The ringgit traded firmer against the US dollar today as Bank Negara Malaysia’s (BNM) intervention helped the ringgit to stabilise even as the US dollar gained strength compared with other major currencies.

At 6pm, the local note ended at 4.6635/4.6705 against the greenback compared with 4.6705/4.6740 on Wednesday.

The market was closed for the Hari Raya Aidiladha holiday yesterday.

SPI Asset Management managing director Stephen Innes said it is not so clear cut to analyse the foreign exchange markets as the ringgit’s strength is an outlier today.

“BNM may sell US dollar forward to intervene as it did in the past. Or it may hike rates to help the currency ward off any imported inflation,” he told Bernama.

“We have not seen any evidence of the latter yet. Still, exporters think this could happen, given how undervalued Malaysian stocks (and the ringgit) are relative to high valuations abroad,” he said.

Innes said EPF could shift its strategy to invest more in local assets or even sell some of its foreign assets, thereby creating ringgit demand.

On June 27, BNM said it would intervene in the foreign exchange market to stem currency movements that are deemed excessive.

Assistant governor Adnan Zaylani Zahid said while the value of the ringgit will continue to remain market-determined, the central bank expects ongoing measures by the government to further strengthen the economy would ensure the ringgit better reflects the country’s fundamentals.

At the close, the currency was higher against the Japanese yen at 3.2220/3.2273 from 3.2427/3.2454. It appreciated vis-a-vis the euro to 5.0571/5.0647 from 5.1128/5.1166 and it improved versus the British pound at 5.8923/5.9012 from Wednesday’s close of 5.9292/5.9336.

The local note traded mixed against other Asean currencies.

The ringgit strengthened against the Singapore dollar at 3.4376/3.4431 from 3.4550/3.4581 on Wednesday and was higher vis-a-vis the Indonesian rupiah at 309.5/310.1 from 311.4/311.9.

It was almost flat against the Philippine peso at 8.44/8.46 from 8.45/8.46, but fell versus the Thai baht to 13.1529/13.1786 from 13.1054/13.1211. - FMT