KUALA LUMPUR (Nov 20): Bank Negara Malaysia (BNM) said on Wednesday it is prepared to deal with currency volatility while ensuring the orderly functioning of the foreign exchange market.

The central bank’s Financial Markets Committee (FMC) continues to monitor the domestic financial market conditions amid unfolding US presidential election outcome and concerns surrounding China’s economic growth prospects, BNM said in a statement.

“The FMC viewed positively that Malaysia's strong economic fundamentals and growth prospects further enhance the financial market’s resilience against external shocks,” the statement said. “In this regard, BNM stands ready to manage market volatility and ensure orderly market functioning.”

The statement comes at a time when the ringgit has pared earlier sharp gains against the US dollar since early October, primarily driven by foreign portfolio adjustments through hedging activities against broad greenback strength.

The US dollar have also gained since Donald Trump secured his return to power in the November US presidential election, rattling global currencies including the ringgit.

The ringgit continues to outperform other regional currencies and has maintained its positive performance against the US dollar for the year, the FMC noted following a meeting on Monday.

“Investor confidence in the resilience of the domestic financial market remains firm,” the 14-member committee observed, citing US$1 billion in foreign inflows into the bond market and US$200 million into the equity market year-to-date.

Conversions of export proceeds, income and excess foreign currencies by resident investors and corporates have continued, while the ringgit's year-to-date average one-month implied volatility remains “manageable” at 4.5% compared to the regional average of 6.0%, the FMC said.

The average daily trading volume in the foreign exchange market also remains robust at US$17.6 billion and “orderly with ample liquidity,” it added.

The committee, set up in in 2016 to broaden industry engagement, is currently led by BNM deputy governor Adnan Zaylani Mohamad Zahid.