Bank Negara: Ringgit remains exposed to heightened volatility

KUALA LUMPUR: The ringgit is expected to remain exposed to periods of heightened volatility as uncertainties remain on the momentum of the global and domestic economic recovery, said Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus.

She said the local note depreciated by 3.5 per cent against the US dollar in the first quarter (Q1) of 2021, mainly due to the strengthening of the greenback, which also resulted in a broad-based weakening of other advanced and emerging market currencies.

This was amid the rebalancing of portfolio investments by global investors following the rise in US Treasury yields, driven by anticipation of a stronger US economic recovery and higher inflation expectations.

“Since April 1, the ringgit has appreciated by 1.0 per cent against the US dollar (as at May 7) and this appreciation was in line with US dollar strength subsiding as US Treasury yields have started to trend lower from its peak in March, ” she told a virtual press conference to announce Malaysia’s Q1 2021 GDP performance today.

Nor Shamsiah noted that increase in global oil prices in early April also provided some support to overall investor sentiment.

On financing conditions, she said net financing to the private sector recorded an annual growth of 4.7 per cent during the quarter under review, supported mainly by higher total outstanding loan growth of 4.3 per cent (Q4 2020: 3.7 per cent).

“Business loan disbursements and repayments remained above their 2017-2019 quarterly average levels.

“Household loan demand also remained forthcoming amid the accommodative monetary policy environment and implementation of various stimulus measures, ” she added. – Bernama