KUALA LUMPUR: Bank Negara Malaysia continued to closely monitor the ringgit movements, which have been declining due to the strengthening of the US Dollar against almost all currencies, to ensure orderly financial market conditions amidst external developments.

The central bank said the greenback had strengthened significantly due to aggressive monetary policy tightening in the United States.

"Ringgit movements will continue to be market determined. The foreign exchange market continues to function and intermediate effectively," said the central bank.

It said daily onshore FX transaction volume has been increasing throughout, reaching a current average of US$13.3 billion against US$11.3 billion in 2021, amid two-way flows. 

The bond market activity also remained healthy and supported institutional investors and financial institutions.

It added that tighter global financial conditions and higher volatility in the foreign exchange markets are not expected to derail Malaysia's economic growth.

Bank Negara says that the domestic financial system is well capitalised with ample liquidity, and financial intermediation continues to support the economy.

Governor Tan Sri Nor Shamsiah Mohd Yunus said Malaysia remains an open economy.

"Rather than resorting to capital controls or re-pegging of the ringgit, the policy priority now is to sustain economic growth in an environment of price stability and strengthen domestic economic fundamentals through structural reforms.

"This will provide a more enduring support for the ringgit," she added.