‘Stronger ringgit re­flects ro­bust fun­da­men­tals’

New Straits Times - - Business -

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.

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