Ringgit remains resilient amid external influences

 

The ringgit is currently hovering at 4.79 versus the US dollar.

PETALING JAYA: The ringgit remains resilient despite the strengthening US dollar amid expectations that the US Federal Reserve (Fed) would maintain interest rates higher for longer.

Economist Geoffrey Williams said all currencies are suffering against the greenback globally, and the ringgit is more resilient at present because Bank Negara Malaysia (BNM) has been effective in managing the market.

He said Malaysia is pooling all the necessary resources to support the local currency.

BNM stated that it stands ready to deploy the tools at its disposal to ensure the Malaysian financial markets remain orderly and continue to function efficiently.

The central bank recently stated the ongoing coordinated efforts to encourage more consistent inflows by the government-linked companies and government-linked investment companies, as well as greater engagements with Malaysian corporates and businesses, have resulted in a positive impact and are deemed sustainable.

“The inflows from the coordinated efforts have helped to stabilise the ringgit,” he told Bernama.

The ringgit is seen hovering at 4.79 versus the US dollar.

Today, the ringgit closed firmer against the US dollar amid a technical rebound after three days of losses.

At 6pm, it was quoted at 4.7910/4.7950 against the greenback compared with yesterday’s closing of 4.7945/4.7970.

Williams said the declining ringgit is not a reflection of the country’s underlying economic fundamentals as the local currency’s current value is highly influenced by external factors.

“The current value of the ringgit has all to do with global factors, including geopolitical issues in the Middle East which are raising risk, and signals from the Fed that interest rates will remain high for longer.

“This is pushing money out of markets like Malaysia to places with higher returns such as the US,” he said.

Meanwhile, Putra Business School’s master of business administration programme director, Ahmed Razman Latiff, said that despite the lower ringgit, the local currency is not the worst performer among Asean currencies.

“Our economic fundamentals have remained strong and resilient.

“We are still registering positive quarterly gross domestic product growth as well as positive current account and trade balances,” he said.

Razman said the foreign exchange market is expected to remain volatile throughout the second quarter of the year as there is no indication of the Middle East crisis de-escalating anytime soon coupled with the possibility of the Fed keeping interest rates high for now.

“Hence, the ringgit’s performance will remain erratic for the time being,” he said.

He also said long-term measures need to be taken to ensure its continued stability.

“The Malaysian government may be taking proactive measures to mitigate the potential impact of geopolitical risks, such as diversifying energy sources, strengthening diplomatic ties to ensure stability in the region, and closely monitoring market developments.

“Malaysia can work with international partners to monitor and manage risks, ensure market stability, and promote economic resilience,” he added. - FMT