(APRIL 8): Malaysia’s ongoing coordinated efforts to encourage repatriation and inflows of foreign currency holdings could be sustained given the focus is on investment income and export revenue which are recurring in nature, the central bank said on Monday.

A more sustained strengthening in the ringgit could spur greater interest for conversion by corporates with excess foreign currency holdings, further supporting sentiment on the ringgit, Bank Negara Malaysia said in a statement following the Financial Market Committee’s latest meeting.

“The meeting was particularly encouraged by BNM’s enhanced efforts to further promote FX conversion activities by Malaysian corporates and businesses,” the committee said.

Malaysia has been encouraging its sprawling government-linked companies and government-linked investment companies to convert and repatriate foreign currencies stashed abroad in a bid to prop up the ringgit which tumbled to a 26-year low in February.

In addition, the central bank has also engaged corporates and private businesses in a massive effort to spur more inflow and support the currency.

Since Feb 26, the ringgit was the only regional currency that strengthened and gained 0.6% against the US dollar. Across the same period, the average daily foreign exchange volume rose to US$17.6 billion (RM83.6 billion) compared with US$15.5 billion in 2023, according to the committee.

Members of the committee — which include banks, corporations, financial services firms and other institutions — noted the higher conversion activities in the onshore FX market driven by the “significant flows” from the coordinated efforts and “opportunistic selling” of US dollars by certain exporters.

The ringgit was last trading at 4.7525. Members noted that the ringgit traded in an orderly manner on Monday morning, opening at 4.7475, the same level as Friday’s close and moved in line with other regional currencies.

Still, the current level of ringgit is “deemed undervalued, particularly as Malaysia’s economic fundamentals continue to be strong and the economic prospect is positive,” said the committee’s chairman and Bank Negara Malaysia Deputy Governor Adnan Zaylani.

He also reiterated that the central bank is “not considering capital controls or restrictions like those introduced during the Asian Financial Crisis taking into account the potential costs and impact to the economy” in response to lingering concerns among market participants.