KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak said on Monday the central bank will keep providing liquidity to the domestic financial market to ensure it remains “orderly”, adding that moves taken to stem the ringgit’s decline have stabilised the currency.
Bank Negara Malaysia (BNM) has taken several steps since late last year to support the ringgit, including asking for a written commitment from foreign banks to cease trading the currency on the offshore non-deliverable forwards market.
In December, the central bank announced measures to boost liquidity and encourage more domestic trade of the ringgit, including allowing exporters to retain only up to 25 percent of export proceeds in a foreign currency.
“Although it has been only two months since the announcement of these measures, there are signs showing encouraging results,” Najib said in reply to a question in parliament.
“At the same time, BNM would continue to provide liquidity in the local market to ensure a stable and orderly situation,” Najib said in a blog post after his statement in parliament.
The prime minister said Malaysia’s international reserves will continue to act as a guard against unchecked volatility in the financial market.
Malaysia’s gross international reserves were $95.0 billion as of Feb. 28, unchanged from Feb. 15, according to the central bank.
“In dealing with the fall in the ringgit’s value in the short-term, the government will always ensure the foreign exchange currency market will not be affected so that economic activities can continue smoothly,” Najib said.
He also said BNM will introduce “liberalisation” moves from time to time to develop the foreign exchange and bond markets, and enable businesses to manage currency exposure. The prime minister did not give any details.
In 2016, the ringgit weakened about 4.3 percent against the dollar.
On Jan. 4, the currency hit a 19-year low of 4.4980 to the dollar. But so far this year, it has strengthened 1.2 percent and on Monday was trading around 4.4260 to the dollar.
Reporting by Joseph Sipalan; Editing by Richard Borsuk