BNM: Malaysian Financial Markets Remain Resilient

KUALA LUMPUR, April 23 (Bernama) -- The Malaysian financial markets remain resilient, with conditions in the capital, foreign exchange (FX) and money markets continuing to be orderly, supported by ample domestic liquidity, robust market infrastructures and firm macroeconomic fundamentals, says Bank Negara Malaysia (BNM) (Central Bank of Malaysia). It said the local bond market continues to be vibrant with a deep secondary market having an average daily trading volume of RM5.4 billion year-to-date compared with the past three-year average of RM3.6 billion. “Liquidity in the FX market recorded a sustainable average daily trading volume of US$12 billion, with the FX swap and forward market accounting for close to half of the average volume,” the central bank said in a joint statement with the Securities Commission Malaysia (SC). BNM recently met the SC at the 16th BNM-SC Bilateral Meeting to advance discussions on areas of mutual interest between both authorities, including sustainability initiatives, digital asset regulations and resilience of the financial markets. Both parties view the increase in dynamic hedging activities by global institutional investors as having improved market access and further contributing to the liquidity in the FX forward market. “The authorities will continue to engage with key market participants and intermediaries to further develop the depth and breadth of the Malaysian financial markets in ensuring accessibility while preserving stability and transparency,” the regulators said. They also discussed initiatives relating to the sustainability agenda, particularly on the SC’s Sustainable and Responsible Investment Framework (SRI) and BNM’s Value-Based Intermediation Strategy (VBI). Given the alignment between SRI and VBI, both regulators agreed to embark on a joint research study to develop a clear taxonomy on sustainable economic activities starting with fundraising and lending practices. “Another area being looked at involves understanding the transmission of climate and environmental-related risks to the financial system and economy, and the feedback loop,” the statement said. This initiative is an expansion of ongoing collaboration between the authorities in areas of national strategic interest especially in Islamic finance. In relation to digital asset regulations, both authorities have entered into coordinating arrangements which will facilitate industry innovation, fundraising activities for early-stage companies and trading of digital assets. The arrangement will also support the oversight of digital asset activities and ensure that systemic risk and financial integrity measures remain effective. -- BERNAMA