The Financial Markets Committee (FMC) convened on Monday (18 November 2024) to discuss recent developments in the ringgit foreign exchange market.

The FMC continues to monitor the domestic financial market conditions amidst key global developments namely the US election outcome and concerns surrounding China’s economic growth prospects. The ensuing uncertainties have heightened volatility in global and regional foreign exchange markets, including the ringgit. Since early October, the ringgit has pared some of its earlier gains to 4.4792, primarily driven by non-resident portfolio adjustments through hedging activities against broad dollar strength.

The FMC noted that the ringgit continues to outperform other regional currencies and maintain positive performance against the US dollar for the year. Key observations that support the positive performance of the ringgit include:

1. Investor confidence in the resilience of the domestic financial market remains firm, evidenced by USD 1 billion in non-resident inflows into the bond market and USD 200 million into the equity market year-to-date.
2. Conversions of export proceeds, income and excess foreign currencies by resident investors and corporates have continued, consistent with underlying operational and investment needs.
3. Despite recent increases in volatility, the ringgit's year-to-date average 1-month implied volatility remains manageable at 4.5% (2023: 5.3%), compared to the regional average of 6.0%.
4. The foreign exchange market remains orderly, with ample liquidity and a robust average daily trading volume of USD 17.6 billion.

The FMC welcomed Bank Negara Malaysia’s (BNM) continued coordinated efforts to encourage more consistent inflows by the government-linked companies (GLCs) and government-linked investment companies (GLICs), as well as greater engagements with Malaysian corporates and businesses. Additionally, BNM has expanded the Qualified Resident Investor (QRI) program, offering flexibility for resident corporates to reinvest abroad after repatriating foreign funds. These measures are expected to support sustained inflows and domestic market liquidity. The FMC also welcomed the liberalisation of foreign exchange policy (FEP) for Multilateral Development Banks (MDBs) and non-resident development financial institutions (DFIs) to support investments in Malaysia.

The FMC viewed positively that Malaysia's strong economic fundamentals and growth prospects further enhance the financial market’s resilience against external shocks. In this regard, BNM stands ready to manage market volatility and ensure orderly market functioning.

About the Financial Markets Committee (FMC)
The FMC was established by BNM in May 2016 and comprises representatives from Bank Negara Malaysia, financial institutions, corporations, financial service providers and other institutions which have prominent role or participation in the financial markets.