KUALA LUMPUR (May 13): Bank Negara Malaysia (BNM) said on Friday (May 13) Malaysian financial markets will be subject to periods of high volatility after the ringgit depreciated 0.7% against the US dollar in the first quarter of 2022 (1Q22) but the country's strong external position and resilient banking system will enable its economy to withstand external shocks.
"Going forward, while domestic financial markets are subject to periods of high volatility, spillovers to domestic financial intermediation are expected to be contained,” BNM said in a statement which was issued in conjunction with the central bank’s announcement on Malaysia’s 1Q22 economic figures.
Looking back, BNM said the ringgit’s depreciation against the US dollar in 1Q22 was broadly in line with the movement of regional currencies.
"This was due to the broad US dollar strength, driven by higher US interest rates, global risk-off sentiment given the conflict in Ukraine and expectations of modest growth in China.
"High commodity prices and Malaysia’s [economic] recovery prospects had also cushioned the downward pressure on the ringgit from these external factors,” BNM said.
At the time of writing on Friday, the ringgit strengthened to 4.3900 against the US dollar.
The exchange rate was between 4.3900 and 4.3970 so far on Friday.
Over the last one year, the exchange rate was between 4.1045 and 4.3970.