The Malaysian central bank has recently addressed concerns regarding the persistent weakness of the ringgit, reassuring investors and the public that this trend is not expected to endure. During a press conference held on October 31, 2024, Bank Negara Malaysia (BNM) Governor Zeti Akhtar Aziz stated that the recent decline in the value of the Malaysian currency is predominantly influenced by external factors and is likely to be transient.
Governor Aziz noted that various macroeconomic conditions, including fluctuations in global commodity prices and geopolitical tensions, have contributed to the ringgit's vulnerability. However, she emphasized that the underlying fundamentals of Malaysia's economy remain robust, which bodes well for a future recovery in the currency’s value.
One critical aspect that was highlighted during the briefing was Malaysia's strong export performance, particularly in sectors such as electronics and palm oil. Aziz pointed out that these sectors continue to thrive despite the current challenges, reiterating that the fundamentals supporting the ringgit could foster a rebound as global economic conditions stabilize.
Moreover, the central bank is actively monitoring the foreign exchange market and is prepared to take necessary measures to ensure economic stability. BNM’s commitment to maintaining a flexible exchange rate regime will allow the ringgit to adjust according to market forces, which Governor Aziz believes will eventually mitigate the volatility observed recently.
As for inflation concerns tied to the ringgit's depreciation, the governor assured that inflation rates remain under control and that BNM will manage its monetary policy to support economic growth while ensuring price stability. The bank anticipates that inflation will trend downwards as supply chain bottlenecks ease and demand stabilizes.
The governor concluded by urging businesses and consumers to remain confident in Malaysia’s economic prospects. She reassured the public that the central bank would continue to uphold its mandate and manage the economic landscape effectively, advocating for patience as the ringgit navigates through this phase.
In summary, while the ringgit’s recent performance has raised eyebrows, Bank Negara Malaysia believes that the current weakness is not indicative of a long-term decline but rather a temporary condition influenced by broader global dynamics. Investors are encouraged to look beyond short-term fluctuations and focus on the underlying economic indicators that suggest a healthier outlook ahead.
As Malaysia moves into the coming months, all eyes will be on how economic policies, global market trends, and internal economic signals unfold, shaping the future trajectory of the ringgit.
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Author: Rachel Greene
