ONSHORE FOREX MARKET SHOWS IMPROVEMENTS
Transactions volume increased to a daily average of US$8.8b in February
THE country’s foreign exchange (forex) market has shown improvements since Bank Negara Malaysia introduced new measures to increase demand for the ringgit and reduce its volatility against the US dollar.
Bank Negara foreign exchange administration department deputy director Makhzani Mustaffa Ng said there had been increasing activities in onshore forex market since the implementation.
He said the onshore forex transactions volume had increased to a daily average of US$8.8 billion (RM39.25 billion) last month from US$7.8 billion in November last year.
Besides, Makhzani said the exchange rate volatility had declined and hence, reduced forex transaction cost.
He said average intraday movement had narrowed to 52 points last month, from 228 points in November last year.
“(Since the implementation) we have seen our forex volume going up by US$1 billion on average daily. The intra-day movement of the forex, on the other hand, has been quoted to 20 points, from 18 points previously.
“The forex market has also recorded a positive net trade conversion for the first time in the last two years,” said Makhzani during his presentation at Bank Negara’s Additional Guidelines for Exporters Forum, here, yesterday.
In December last year, the central bank announced that exporters could only retain up to 25 per cent of export proceeds in foreign currency, while the remainder must be converted into ringgit.
The new measures were to boost liquidity and encourage more domestic trade of the ringgit, as Bank Negara looked to stem the ringgit’s slide against a surging dollar.
The forum, organised by the Malaysian Palm Oil Council (MPOC), is to inform the palm oil industry players on the latest requirements implemented by Bank Negara and its impact on the industry.
“This forum is a timely reminder to the palm oil industry to help gain better understanding of the new regulation, especially for exporters,” said MPOC chief executive officer Dr Kalyana Sundram.
Dr Kalyana Sundram