Bank Negara Governor Highlights Ringgit’s Strength Amid Narrowing US-Malaysia Rates Gap

Bank Negara Malaysia‘s governor, Datuk Seri Abdul Rasheed Ghaffour, expressed optimism about the ringgit’s resilience amidst narrowing interest rate differentials between Malaysia and the United States. This confidence stems from robust domestic growth, ongoing government reforms, and the US Federal Reserve’s monetary easing stance.

Bank Negara’s Optimistic Outlook

• Strong Economic Fundamentals: Malaysia’s strong economic growth and structural reforms have bolstered investor confidence, providing a positive outlook for the ringgit.
• US Federal Reserve’s Policy Shift: The Fed’s easing stance, including a cumulative 75-basis-point cut in federal funds rates in September and November, has supported the ringgit. Financial markets anticipate further rate cuts into 2025.
• Coordinated Domestic Efforts: The government and Bank Negara have implemented measures, such as the Qualified Resident Investor (QRI) programme, to encourage the repatriation and conversion of foreign currency funds into ringgit.

QRI Programme Expansion

In response to positive feedback, the pilot QRI programme’s eligibility threshold for resident corporates has been lowered from RM1 billion to RM500 million in direct investment abroad assets. The registration deadline has also been extended to June 30, 2025.

Recent Ringgit Performance

• The ringgit strengthened by 14.9% in Q3 and 3.1% year-to-date as of November 13, attributed to global and domestic developments.
• Despite recent financial market volatility following the US presidential election, the ringgit’s movement aligns with Malaysia’s economic fundamentals.

Challenges and Risks

Abdul Rasheed acknowledged external risks, including geopolitical tensions, US policy uncertainties, and a gradual reduction in US interest rates. However, he remains confident that Malaysia’s growth and reforms will continue to support the currency.

Bank Negara aims to maintain orderly adjustments in the ringgit and balance financial flows while navigating global and domestic challenges.

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