Support for BNM initiatives to widen ringgit onshore liquidity
KUALA LUMPUR: Financial market stakeholders are keen to support Bank Negara Malaysia in its efforts to deepen the onshore market’s liquidity while providing market players more flexibility to manage foreign exchange (forex) risks.
“We look forward to carry through these initiatives and engage with the industry to support an efficient and effective implementation,” said the Financial Market Committee (FMC), here, yesterday.
Among some of the initiatives already rolled out are extending trading hours for the forex market and the Kuala Lumpur US dollar/ringgit reference rate.
Bank Negara also announced a pilot programme for the US dollar and ringgit and yuan and ringgit markets recently and is working with the Securities Commission and Bursa Malaysia to facilitate the introduction of US dollar and yuan against ringgit futures for the onshore exchange.
FMC is in the final stages of rolling out an operational framework for Foreign Exchange Administration (FEA) compliance.
Meanwhile, the FMC reminded banks of their key role in ensuring there is no speculative trading of the ringgit internationally during this current period of “undue volatility”.
The recent move by the central bank to come down on ringgit nondeliverable forwards (NDF) is important to protect the real sectors in the economy and the genuine investors in the local financial system.
The FMC reminder was aimed at the 58 onshore banks in the country.
“Ringgit prices and its volatility had been affected by activities and prices in the offshore NDF market that is not necessarily reflective of economic fundamentals and underlying trade and investment activities.”
The FMC comprises participants and representatives from the central bank, financial institutions, corporations, financial services providers and other stakeholders.
It said liquidity continues to be available in supporting a smooth and orderly functioning of Malaysian financial market in intermediating the needs of market participants.
A total of RM39.7 billion and US$49.1 billion (RM218.13 billion) was transacted in the Malaysian bond and forex markets from November 14-18 this year.
This compared with the RM17.8 billion and US$31.6 billion that was transacted in the preceding week, respectively.
Non-resident participants, such as corporates, global asset and fund managers as well as clearing and custodian banks, continue to transact in the local A total of RM39.7 billion and US$49.1 billion was transacted in the Malaysian from November 14-18 this year. Pic by Malai Rosmah Tuah
financial markets.
The transactions were intermediated by onshore banks, which include 19 foreign banks that are subsidiaries of regional and large global banks.
In the morning session, the ringgit
depreciated further under selling pressure, but the local currency rebounded to close at 4.4583 against the US dollar, gaining 0.002 sen, after news of the two Australian banks being fined for fixing the ringgit’s exchange rate.