KUALA LUMPUR: The ringgit is heading in the right direction, reflecting the country's strong economic fundamentals and growth prospects for the next couple of years, according to Bank Negara Malaysia (BNM).
Governor Datuk Seri Abdul Rasheed Ghaffour said he believes the ringgit will continue to remain supported by the further narrowing of interest rate differentials with the United States and other countries, as well as the growing investor optimism.
"We have noticed, especially when we did our roadshow ... an increase in investment sentiment and this will help the ringgit as we move forward. Second, in terms of the structural reforms that the government is undertaking, this is something that (will have) enduring support for the ringgit.
"Nevertheless, I think given the uncertainty, we can expect some bouts of volatility to happen in the near term as the market navigates a shift in US policies with the new president later this month," he said during a panellist session at the Malaysia Economic Forum (FEM) 2025 today.
The governor also highlighted that the ringgit regained its footing beginning in July last year when the US Federal Reserve started to cut its interest rate, narrowing the rate differentials between the United States and Malaysia. Additionally, the coordinated actions undertaken by the government with BNM also ensured two-way flows in the market.
"In terms of coordinated action, since we started in February last year, we have seen that there is a very healthy two-way flow. For example, if you look (at) the average daily forex volume in the onshore market it has increased to about US$18 billion (US$1=RM4.50) compared to about US$15 billion in 2023. So there is some improvement that we have seen from the coordinated action," he added. - Reuters
