USD1 Is Now RM4.12! Bank Negara Explains Why The Ringgit Has Risen Strongly
The ringgit has hit its highest level against the US dollar in 34 months, rising 16% since the February low.
Bank Negara Malaysia (BNM) has provided insights into why the ringgit has been strengthening against the US dollar since early July
BNM deputy governor Adnan Zaylani Mohamad Zahid stated in a forum yesterday, 25 September, that a smaller gap in interest rates between Malaysia and developed countries, especially the US, has made the country a more appealing destination for foreign investments in its financial markets, benefiting the country's portfolio inflows, reported Bernama.
He said the moves significantly strengthen the ringgit, given Malaysia's positive economic outlook.
"The domestic landscape is also quite positive. Ongoing government structural reforms, subsidy rationalisation, and social protection enhancements offer a window of opportunity to pursue meaningful change.
"Furthermore, the coordinated actions between the government and BNM, which has already facilitated a better balance for [fund] flows, will continue, providing sustainable support for the ringgit.
"Importantly, ongoing structural reforms by the government, coupled with improving economic prospects, will continue to sustain global interest for investment in Malaysia," he explained.
Adnan Zaylani emphasised that these factors, along with Malaysia's solid economic fundamentals and mature Islamic finance ecosystem, position the country as a natural hub for Shariah-compliant investments.
The ringgit hit 4.1275 against the US dollar yesterday, 25 September, marking a 16% rise from its February low of 4.8053
This is the highest level the ringgit has achieved in 34 months against the US dollar, reported The Star.
The strengthening of the ringgit was catalysed by the US Federal Reserve's (FED) decision to cut interest rates by 0.5%, the first reduction in more than four years. As of 18 September, the current FED interest rate is 4.75% to 5.00%.
Additionally, just this Monday, 23 September, China announced a broad range of stimulus measures to revitalise its economy, support the real estate market, and adjust its banks' reserve requirements.
Its central bank will guide commercial banks to reduce the interest rates on existing mortgages by 0.5% in the coming months, reported Reuters.
These global economic factors, combined with Malaysia's strong economic outlook, have made the ringgit comparatively more favourable.
In September 2022, the ringgit hit 4.5200 against the US dollar:
In October last year, the ringgit breached the RM3.50 to SGD1 mark:
Meanwhile, here is why you can't find currency exchange rates on Google now:
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