Sustained onshore market volume and liquidity

“As offshore liquidity increased with greater volume, even our domestic corporates and small and medium enterprises were beginning to find ways to transact in the offshore market.

“Our onshore market was being hollowed out and if this were to continue, the ringgit exchange rate would have been completely driven and determined by the offshore market, subjecting it to greater volatility and at the mercy of external developments. But this is much less the case today,” said Adnan.

He said with the series of FMC initiatives, BNM has corrected this course.

Volume and liquidity in the onshore market have sustained and picked up.

More foreign investors and corporations are now transacting in the onshore market either directly or via the arrangements that effectively are an extension of the onshore market.

“Onshore financial market liberalisation is an important journey to enhance the liquidity and depth of the markets.

“Yet we have to be cognizant of the risks. Further liberalisation can come but must be in a balanced form and with conditions that will ensure the central bank will always have the surveillance capacity and the instruments to intervene if necessary,” he said.

The markets need to be balanced and cannot be left to adjudicate and resolve crisis on its own.

“But the markets also have to be demand- driven. To this the FMC needs to mobilise and work further, meeting the ever- evolving market demands in ways that will satisfy our aspirations of an efficient, yet balanced and resilient financial markets,” Adnan opined. — Bernama