KUALA LUMPUR (March 25): Bank Negara Malaysia (BNM) told businesses to defer new investments and hedge investments abroad among other recommendations to help prop up the ringgit.

The central bank held an engagement session with chambers of commerce, business councils, trade associations and chief executives of Malaysian companies, during which the BNM emphasised “whole-of-nation approach”, the Federation of Malaysian Manufacturers (FMM) said in a statement.

BNM, in its “call to action to the business community”, stressed on measures including adopting a “Malaysia First attitude” by prioritising domestic investment and choosing domestic goods and services, which FMM said has been “conveyed to its members via a members’ advisory”.

On March 20, BNM said it found rising foreign currency holdings among Malaysian corporates, exporters and importers, resulting in an imbalance that weakened the ringgit in the short run.

On top of the call to state-owned companies, the central bank “strongly urged” Malaysian businesses from all sectors to repatriate their investment income and convert export proceeds back to ringgit to support efforts to manage short-term pressure on the local currency.

Still, BNM in its 2023 annual report cautioned that the road ahead for the ringgit may be bumpy, even as the monetary tightening cycle may have peaked and eased some pressure on the currency.

Further, the FMM relayed to its members the central bank’s call to use local currency facilities to reduce dependency on US dollar for trade settlement and to refrain from holding back conversion and front-loading import payments beyond what is required for business needs.

“It is hoped that with the collective action by BNM to ensure sufficient liquidity in the domestic FX market, and the dynamic management of monetary operations and the support from the business community, the ringgit will strengthen in the coming months,” the FMM added.