Malaysia's central bank said on Wednesday it would step up efforts to support the ringgit, including measures to attract foreign funds and encourage state-linked firms and companies to repatriate overseas earnings.
Bank Negara Malaysia said its Financial Markets Committee, which met to review the ringgit's more than 4 per cent decline so far in June, noted that the country's economic fundamentals remain strong and that the onshore foreign exchange market continues to function smoothly.
Here are some details from the meeting:
• The central bank said that recent weakness in the currency was due to cautious positioning by foreign investors and growing expectations of higher interest rates in the United States, days after the ringgit hit a seven-month low.
• The FMC said global financial markets remained focused on rising prospects of higher U.S. policy rates as elevated inflationary risks weigh.
• The FMC noted foreign investor outflows but said they largely reflected portfolio adjustments following the ringgit's strong performance earlier in the year.
• The ringgit, despite a 4.5 per cent decline in June, remains only 2 per cent in red for the year, making it one of the best-performing currencies in emerging Asia.
• "NR (non-resident) investors are seen to be taking a neutral stance in their portfolio positioning," the committee said.
• "Looking ahead, external developments, as well as domestic factors, are expected to continue driving the ringgit performance, but Malaysia's solid economic profile will help to provide enduring support to the ringgit."
Source: channelnewsasia