The Malaysian ringgit’s slide towards a 24-year low has raised expectations that the Bank Negara Malaysia (BNM) will intervene to halt the decline.
The currency has fallen more than 5% in the past three months, underperforming all its emerging Asian peers due to domestic political instability, a disappearing yield premium over Treasuries, and China’s slowing growth, Bloomberg reports.
BNM Intervention Expected
Traders are on the lookout for signs of support from the BNM as the full impact of the bank’s current quantitative tightening program is set to be felt in the coming months.
Analysts suggest that a further drop of almost 2% could prompt the BNM to intervene to support the ringgit.
See Also: Rupee’s Fall Likely To Continue In Light Of US Fed’s Rate Hike Plans: Reuters
Ringgit’s Decline and BNM’s Response
The ringgit fell 0.1% to 4.6650 per dollar on Friday. If May industrial production figures due Wednesday undershoot expectations, the recent slide may extend. BNM and market representatives have stated that the central bank is ready to intervene to stem forex movements that are “deemed excessive.”
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