BNM measures help lowered average in onshore RM market
Published on: Friday, March 24, 2017
The measures taken by Bank Negara Malaysia (BNM) to deepen and broaden the domestic foreign exchange market has lowered the average volatility in the onshore ringgit market to 5.4 per cent in January 2017 from 7.5 per cent in November 2016.In the Financial Stability and Payment Systems Report 2016 released Thursday, the central bank said the desired impact of the measures will require more time to materialise."Risk-taking Malaysian financial institutions were broadly unchanged. Treasury assets of the banking system expanded slightly by 2.9 per cent to RM369.3 billion or 15 15.1 per cent of total assets," BNM said.
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It said the bulk of the increase reflected the purchase of Malaysian government securities (MGS) and government investment issues (GII) in the final two months of the year.To recap, global financial markets experienced several episodes of heightened market volatility in 2016.Moderate global growth and inflation, changing expectations on the pace and timing of interest rate normalisation in the US and low global commodity prices continued to weigh heavily on investor sentiment and behaviour.These uncertainties induced bouts of volatility in global portfolio flows, the bank said.
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In the second half of 2016, global market reactions to the outcome of the US presidential election, UK referendum and other global political developments further exacerbated episodes of volatility."The domestic market volatility was also influenced by persistent concerns over the impact of oil price movements on the country's fiscal outlook and speculative activities in the ringgit non-deliverable forward (NDF) market," it said.
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The local note ended the year lower by 4.3 per cent at RM4.4860 against the US dollar.Stay up-to-date by following Daily Express’s Telegram channel.
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