Economists see positive signs for Malaysian economy despite challenges

Economists say our government’s recent efforts to support the ringgit are bearing fruit. In March, Bank Negara Malaysia (BNM) made this request. Exporters and foreign investors repatriate profits and income I’m going back to Malaysia. The central bank also asked companies to postpone new investments abroad and hedge offshore investments to support the ringgit.

As a result, Expansion of Malaysia’s foreign exchange reservesFor example, they have risen from. 108.5 billion USD in October last year, 113.4 billion USD in MarchBank Muamarat Malaysia chief economist Afzanizam Rashid said this was a positive sign.

“High foreign exchange reserves make the central bank better equipped to intervene in the foreign exchange market (if necessary)” – Afzanizam Rashid, interview with Free Malaysia Today

He said BNM’s gradual increase in overnight policy rates had also been successful. Keep inflation flat without affecting growth. Operating profit margin was lowered from 3% to 1.75% during the COVID-19 pandemic, but since the threat of COVID-19 has eased and the global economy has improved, operating profit margin has been gradually increased. As of May last year, it was 3%.

Afzanizam noted that the inflation rate has slowed from 4.7% in August 2022 to 1.8% in February this year.

University of Science and Technology President Barjoyai Bardai said the fact that Malaysia had managed to accumulate reserves of over RM520 billion Ringgit is backed by good fundamentals.

“Local currencies may be underperforming against some regional currencies, but they remain resilient amidst global uncertainty and war,” Barjoyai Bardai, F.A. For Lee Malaysia Today

BNM also reaffirmed its plans to ensure the orderly functioning of the foreign exchange market and support sovereign wealth funds, companies and exporters to increase liquidity.

Both economists also noted that while sentiment remains positive, not everything is rosy.

There are concerns about the difference between Malaysia’s OPR and US interest rates.

Afzanizam Rashid, chief economist at Bank Muamarat Malaysia Berhad, said:from image FMT.

Currently, the US federal funds rate is 5.5%, 250 basis points above Malaysia’s OPR. Mr. Afzanizam pointed out that: Higher interest rates in the U.S. will attract more money to the U.S..

“For example, the 10-year yield on US government bonds is around 4.2%, while the yield on Malaysian government bonds is 3.96%. Investors will find investing in the US more attractive.” – Afzanizam Rashid, Free Malaysia To Today

He said interest rate differentials may also have caused the ringgit to fluctuate, and challenges will continue, but we will have to wait and see how things play out. Afzanizam also said that if the low inflation trend continues and the economy weakens, the US Federal Reserve could decide to cut interest rates more quickly.

According to Muamarat Bank’s Chief Economist, now we have to focus. Shift towards sustained growth given that rising interest rates can have a significant impact on the economy.

Mr Barjoyai said efforts to increase the value of the ringgit involve complex elements and priority must be given to addressing issues such as the Malaysian government’s rising statutory debt levels.

“As the ringgit continues to weaken, it is important to foster confidence to attract more investment…to stimulate positive sentiment, strengthen economic fundamentals, and attract more than RM60 billion in foreign workers. Efforts to tackle key issues such as remittances are important.” – Barjoyai Bardai Today, you can visit Malaysia for free.

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