Malaysia's Central Bank Intervention To Support Ringgit Unnecessary, says AIBC

By Zarul Effendi Razali KUALA LUMPUR, Dec 8 (Bernama) -- Any intervention by Bank Negara Malaysia (BNM) to support the Malaysian ringgit against the US dollar is unnecessary as the central bank has already implemented measures to enhance liquidity in the foreign exchange market, said the ASEAN-India Business Council (AIBC) Malaysia. Chairman Ramesh Kodammal said there should not be too much fluctuation in the ringgit at the moment, following BNM's latest measures. "Looking at the present situation, the measures that BNM has taken, requesting exporters to convert 75 per cent of the US dollars into the ringgit, is a good idea, at the time being, of supporting the ringgit," he told Bernama after the the Institute of Chartered Accountants in England and Wales' (ICAEW) media briefing on the latest South East Asia Economic Insight here Wednesday. In a separate announcement, BNM on Wednesday said its international reserves fell US$1.9 billion to US$96.4 billion as at Nov 30, 2016 from US$98.3 billion two weeks earlier, reflecting the liquidity support in the foreign exchange market. The reserves position as at Nov 30 is sufficient to finance 8.3 months of retained imports and is 1.2 times the short-term external debt, according to the announcement. Meanwhile, ICAEW Economic Advisor and Oxford Economics Lead Economist Priyanka Kishore said BNM's intervention to support the ringgit had been expected. "Since the broader sell-off has happened, I would think that most central banks have intervened, so I would be surprised that given they (BNM) have taken such other steps very openly, that they have not intervened at all," she said. Last Friday, BNM announced new measures to encourage more domestic trade in the ringgit, as it looks to stem the currency's recent slide against the surging US dollar. In a statement, it said exporters can only retain up to 25 per cent of export proceeds in a foreign currency under the new measure, with higher balances needing BNM's approval. "Foreign currency arising from conversion of export proceeds will be used to ensure continuous liquidity of foreign currency in the onshore market," it said. The new measures took effect on Monday. Meanwhile, Ramesh said moving forward, the ringgit is expected to remain at the current level in the short term, before bouncing back to about RM4 per US dollar in the first half of 2017. "I strongly believe that our exports will improve and oil prices are going to remain at around US$60-65 per barrel in the first half of next year, in line with the recovery in other commodity prices. "A lot of foreign investment is expected to come in the future, particularly due to the lower ringgit," he said. --BERNAMA