The government and Bank Negara Malaysia (BNM) are currently taking various remedial measures to strengthen the value of the ringgit, including ensuring that the domestic foreign exchange market remains orderly. Furthermore, BNM has announced that they have intensified efforts to encourage the repatriation and conversion of foreign investment income by Government-Linked Companies (GLCs) and Government-Linked Investment Companies (GLICs), in addition to stepping up engagements with investors and corporates. BNM also actively engages with resident exporters and monitors their conversion of export proceeds to ringgit. Altogether, these actions are contributing to greater and sustained inflows, lending support to a firmer ringgit.
On these remedial measures, Benedict Weerasena, Research Director of Bait Al Amanah was recently interviewed on the potential impacts when the government controls overseas investment by private companies, including encouraging them to prioritise domestic investment and delaying new overseas investment.
Weerasena explained that this is a nuanced approach taken to counterbalance the declining ringgit. Rather than resorting to coercion to force private companies to solely invest domestically, BNM is intensifying its engagements with investors and corporations to minimize outflows voluntarily. This signifies a market-driven initiative where engagement and nudging, rather than state interference, play pivotal roles in shaping investment decisions.
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