KUALA LUMPUR: Bank Negara Malaysia (BNM) said it is observing a concerning trend of increasing foreign currency holdings among Malaysian corporates, exporters, and importers. 

BNM governor Datuk Abdul Rasheed Ghaffour said this accumulation of foreign currency has led to an imbalance that has, in turn, weakened the ringgit in the short term.

"We noticed an increasing trend by certain exporters taking time to convert their export proceeds, importers frontloading the purchases of foreign currency, and corporates not converting their overseas investment income. "This behaviour has contributed to the imbalances in the foreign exchange (forex) market," he said in a press conference in conjunction with BNM's Flagship Publications today.

As such, Abdul Rasheed urged Malaysian businesses across all sectors to repatriate their overseas investment income promptly and convert export proceeds back to ringgit. 

He said this will support the central bank's efforts to manage short-term pressure on the local currency.

Abdul Rasheed also said BNM is seeing positive outcomes from the coordinated actions with the government to encourage repatriation and conversion of foreign investment income by government-linked companies (GLCs) and government-linked investment companies (GLICs).

"We saw immediate impact on market flows since February, and there is increased demand for ringgit. "We have also seen positive responses from the forex traders. Most of them agreed that ringgit is undervalued, and they appear more willing to hold on to their ringgit positions for longer," he noted.

https://www.nst.com.my/business/corporate/2024/03/1028339/bnm-sees-concerning-trend-increasing-foreign-currency-holdings