KUALA LUMPUR: Bank Negara Malaysia (BNM) expects the ringgit to perform in the long run, driven by strong economic fundamentals, BNM Governor Muhammad Ibrahim said.
He said the ringgit’s current volatility against the US dollar was due to the strengthening of the greenback, following normalisation of uncertainty surrounding the interest rate adjustment in the world’s largest economy.
Muhammad said this was evident by the volatility faced by regional currencies against the US dollar.
“Regional currencies reflect the strength of the US dollar which has been quite strong over the last few months.
“But, if you look at economic data, we (Malaysia) are strong.
“So, for the long run, it (ringgit) will reflect our strength in the economy,” he told a press conference to announce the country’s economic performance in the second quarter here today.
In the short-term, he said, the ringgit was expected to remain volatile, influenced by external factors such as global growth, geopolitical events and policy changes in the developed economies.
“The new norm is that the ringgit will be volatile,” he added.
On the overnight policy rate (OPR), Muhammad said BNM would evaluate the current economic data before taking any action on the rate.
“We have not looked at the numbers yet. After we look at the numbers, then we will discuss how to move forward,” he said.
As for the current account, he said the central bank was optimistic that it would continue to remain in the positive territory this year despite the challenging environment.
“However, for next year, it will depend on the global growth.
Muhammad said the central bank also maintained the fiscal deficit forecast of 3.1 per cent to the gross domestic product.