‘Stronger ringgit reflects robust fundamentals’
KUALA LUMPUR: The strengthening ringgit is no surprise as it reflects the strong economic fundamentals of the country, said Bank Negara Malaysia governor Datuk Seri Muhammad Ibrahim.
“It is reflected by the strength of the economy and we have let the market decide the level,” he said after the Kijang Emas scholarship award ceremony for high achievers, here, yesterday.
Bernama reported that the ringgit was quoted at 4.2770/2800 against the greenback at 6pm yesterday from Wednesday’s close of 4.2910/2950.
“We have said many times, the level will reflect the economic fundamentals of the country, which are very strong,” said Muhammad, referring to the first-quarter gross domestic product results that grew at a robust 5.6 per cent.
International reserves had also expanded to US$96.1 billion (RM411 billion) as at the end of last month.
Between November last year and last month, there was a large outflow of funds but the bond market remained stable because it was intermediated by strong institutional support, said Muhammad.
“There is enough liquidity in the market — both in the central bank and the banking system.”
The Malaysian bond market remains resilient. The last two primary auctions of government bonds recorded a healthy bid-tocover ratio of more than two times.
Following higher market demand, Malaysian Government Securities benchmark yields have eased between eight and 32 basis points across the yield curve.
Non-resident holdings of government papers have also been pared down from a peak of 34.7 per cent to 25.3 per cent as at the end of last month.
Earlier, at the 21st Malaysian Banking Summit, Muhammad told financial institutions to continue to strengthen resilience and buffers, especially during good times, to tackle new risks and challenges.
He said bankers should be proactively offering solutions to some of the pressing economic issues facing the country.
The central bank would introduce further regulatory measures to strengthen the foundations for a strong and resilient banking system over the next seven months, he added.
There would be a “mandatory employment reference check” for financial industry employees.
“We will share with the industry the proposed revisions to the outsourcing policy to improve governance and supervision of financial institutions, especially involving cross-border arrangements.”
A shared security operations centre for the financial industry will also be established to support the monitoring of cyber threats.
By next year, Bank Negara hopes to operationalise an industry-wide implementation of electronic know-your-customer for the on-boarding of customers.
Muhammad also told banks that they should be concerned with the sizeable surplus of commercial property in contrast to affordable housing.
“It may well be time to consider how we might correct practices that are encouraging banks to lend ‘too much too early’ in specific property segments, before demand drivers are firmly entrenched,” he said. Rupa Damodaran
Bank Negara Malaysia governor Datuk Seri Muhammad Ibrahim (second from left) with recipients of the Kijang Emas scholarship in Kuala Lumpur yesterday.