KUALA LUMPUR: The ringgit is expected to continue to strengthen into 2025 as the effects of global factors subside and Bank Negara Malaysia (BNM) continues to intervene.
"Following this and beyond conducting foreign exchange operations, BNM has been actively engaging with government-linked companies (GLCs) and government-linked investment companies (GLICs) to encourage more consistent repatriation and conversion of their foreign investment income into ringgit.
"At the same time, BNM is closely monitoring the trends of foreign currency holdings by Malaysian corporates, exporters and importers. "These actions are contributing to positive outcomes. BNM has seen increased flows and market interest in buying the ringgit," it said in its Economic and Monetary Review 2023 (EMR 2023) report today.
Given Malaysia's strong fundamentals and positive growth prospects, BNM has reiterated that the current ringgit level is undervalued.
Meanwhile, BNM also highlighted that in the report that the Malaysian economy is projected to grow between four to five per cent in 2024.
This will be supported by the resilient domestic demand and improvementin external demand.
Headline inflation is expected to average between two to 3.5 per cent in 2024 amid contained cost pressures from easing global supply conditions.
Inflation outlook remains highly subject to upside risks due to potential price adjustments on food and energy items, as well as external pressures from exchange rate and global commodity price developments.
BNM added that domestic monetary and financial conditions remain conducive of financial intermediation.
Credit supply will be supported by continued willingness of financial institutions to lend amid a strong banking system and a healthy capital market.
In addition, the improving economic and labour market conditions will support credit demand. BNM's monetary policy will continue to be forward-looking with a focus on the trajectory of growth and inflation.