Ringgit began to stabilise towards end 4Q16, says Bank Negara Malaysia

KUALA LUMPUR: The ringgit, along with regional currencies, began to stabilise towards the end of the fourth quarter 2016 amidst higher stability in the global financial markets, says Bank Negara Malaysia (BNM).

“The implementation of measures to develop, deepen, and address the rising imbalances in the domestic foreign exchange market, and firmer global crude oil prices, lent stability to the domestic foreign exchange market towards the end of the quarter,” the central bank said in a statement yesterday.

BNM yesterday announced that Malaysia’s economy recorded a 4.5 per cent growth in the last quarter of 2016, underpinned by continued expansion in private sector expenditure, leading to a full year growth of 4.2 per cent.

It said the ringgit also faced additional adjustments during the quarter following speculative activity in the non-deliverable forward (NDF) market.

Earlier in the quarter, the ringgit and all major and regional currencies depreciated against the US dollar, driven mainly by portfolio investment outflows from emerging economies and amid uncertainties arising from the outcome of the US Presidential election.

Expectations of an interest rate increase, the actual increase in the US Federal Reserve’s policy rate in December 2016, and anticipation of a faster pace of US interest rate normalisation in 2017, exacerbated portfolio outflows while exerting further downward pressure on most major and regional currencies, BNM said.

Overall, the ringgit depreciated by 7.6 per cent against the US dollar during the quarter.

It also declined against the euro (-1.6 per cent), the pound sterling (-2.4 per cent) and the Australian dollar (-2.5 per cent), but appreciated against the Japanese yen (6.3 per cent).

The ringgit also depreciated against all regional currencies, with the exception of the Korean won, by between 2.1 per cent and 5.6 per cent. — Bernama