PETALING JAYA: Regional currencies including the ringgit are expected to do better against the US dollar in the coming year, backed by news and indicators that the US federal funds rate is possibly close to a peak.
Bank Negara Malaysia (BNM) deputy governor Adnan Zaylani Zahid said Malaysia’s fundamentals are also “looking positive” with the government’s announcements on various development projects related to infrastructure, energy transition, and the New Industrial Master Plan (NIMP 2030).
“If the scenario plays out where global developments see a peak in interest rates in developed markets next year, then the region’s currencies as a whole, including the ringgit, are expected to do better.
“However, we cannot take that for granted. BNM will continue to monitor and take appropriate actions in the market, and continue to work with the financial industry to understand the need for a balanced narrative,” he said at a BNM Media Workshop 2023 here today.
He said sensationalising biased coverage introduces fear and the media has the responsibility and power to ensure public confidence and trust because the public is susceptible to psychology anchoring. “If the public anchors to something specific, it may become a self-fulfilling prophecy.”
After 11 increases since March 2022, the benchmark Fed rate is now between 5.25% and 5.5%.
On the government’s effort to reduce ringgit volatility, Adnan Zaylani said this stems from BNM’s mandate and initiatives that have been taken over the past year.
He also expects more news flow in the coming quarters on foreign direct investments in the country.
“That will also create more momentum for the ringgit. So, we are positive (on) the ringgit for this coming year and many market analysts have also forecast a stronger ringgit in the coming year,” he added.