Statement by Financial Markets Committee: Updates on the Malaysian Financial MarketRef No : 01/17/04 17 Jan 2017 Embargo : For immediate release
The Financial Markets Committee (FMC) would like to provide an update on the financial markets and the impact of the 2 December 2016 measures following the last report on 28 December 2016.
Financial markets continue to see healthy activities with the onshore foreign exchange (FX) market recording a daily average volume of USD9.2 billion across all types of FX transactions. The daily average volume for onshore spot and forward market transactions particularly for Ringgit Malaysia (MYR) currency pair has been above USD2 billion, similar to the level recorded in December 2016. Transactions volume in the ringgit non-deliverable forward (NDF) market continues to shrink.
The ringgit has been stable amidst global uncertainties and developments in the United States as markets anticipate policy details by the incoming Trump administration. The exchange rate volatility declined with average ringgit intraday movement narrowing to around 61 points from an average of 82 points in December last year. The difference between the buying and selling rates has also narrowed noticeably to 20 points in January, reducing the foreign exchange transaction cost. The ringgit level could further stabilise with the continued rebalancing of demand and supply of the ringgit and the adverse influences from the NDF market being further reduced.
For the trade sector, a total of USD10.7 billion of foreign exchange transaction in relation to exports and imports of goods with a daily average of USD1.1 billion took place during the period of 1 to 16 January 2017. The percentage of export proceeds conversion continues to increase. For the economy at large, reduced exchange rate volatility and the narrowing of the spread between buying and selling rate has lowered the transaction cost of conversion. The continuous engagement with stakeholders, particularly the corporations and exporters by Bank Negara Malaysia (BNM) has resulted in a decline in the number of queries received on the initiatives and its implementation. Since the announcement of the new measures, 1,500 queries were received, of these 84% have been responded to. The remaining cases will be resolved soon.
For the fund manager hedging framework, two additional fund managers have registered with BNM since the last update with the total assets under management (AUM) eligible under the framework increasing to RM44.4 billion. BNM has also engaged two international financial market associations representing global fund managers and banks to provide clarity on the framework. BNM will facilitate the registration and participation of their members in the onshore financial market.
BNM and FMC will continue to monitor the progress and garner feedback from the public on the initiatives and engage all stakeholders to ensure its successful implementation. This is aimed at creating a conducive and orderly financial market environment to facilitate business and economic activities.
Financial Markets Committee
17 January 2017
About Financial Markets Committee (FMC)
The FMC is a committee established by BNM in May 2016 and comprises representatives from Bank Negara Malaysia, financial institutions, corporations, financial service providers and other institutions which have prominent role or participation in the financial markets. The Chair of the FMC is BNM Assistant Governor Adnan Zaylani.
The objective of FMC is to broaden the industry engagement with a focus in reviewing and formulating comprehensive strategies for the wholesale financial markets to meet the diverse and complex demands of a more developed and internationally integrated economy. For more information on the FMC, please refer to the following link: http://www.bnm.gov.my/index.php?ch=en_fxmm_mo&pg=en_fxmm_fmc&ac=451&lang=en
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