PETALING JAYA – Malaysia is not the only nation suffering currency depreciation, as the US dollar has strengthened against most currencies, said Bank Negara Malaysia (BNM).
This is reportedly due to ongoing developments in global financial markets that have weighed down on market sentiment, including the US debt ceiling impasse and stress in the US and European banking sectors.
These developments led to increasing demands for safe-haven assets, such as the US dollar, and outflows from most emerging market economies.
“Against this backdrop, the US dollar has strengthened against most currencies,” BNM said in a statement yesterday.
“Consequently, the ringgit, like most currencies, has faced heightened depreciation pressures.
“The recent depreciation of the ringgit is not limited to Malaysia alone,” the central bank added.
BNM stressed the importance of measuring the ringgit’s performance against the currencies of Malaysia’s significant trading partners, and not the US dollar alone.
As the ringgit’s performance is impacted by external developments, BNM said, it does not reflect the nation’s economic state.
It added that the ringgit’s movement against major trade partners is “relatively more muted”, according to measures by the nominal effective exchange rate.
Nonetheless, BNM believes the ringgit’s performance will improve as global market uncertainties subside.
It also expects Malaysia’s economy to expand between 4% to 5% this year, following labour market recovery and approval of multi-year investment and capital projects.
Projects include the East Coast Rail Line, LRT Shah Alam Line, and Pan Borneo Highway.
Yesterday, Deputy Finance Minister I Datuk Seri Ahmad Maslan said the cabinet will discuss strategies to overcome the declining ringgit value with BNM representatives, after the currency hit a six-month low at 4.6257 to the US dollar.
Yesterday morning, the ringgit opened at 4.6280/6305 against the US dollar, after closing at 4.6245/6285 a day prior. – The Vibes, May 26, 2023
