KINIBIZ The ringgit is significantly undervalued, Bank Negara Malaysia (BNM) Governor Zeti Akhtar Aziz said today at  a press conference in conjunction with the release of the its 2014 Annual Report.

Pressed for a fundamental value of the ringgit and a forecast for the ringgit, she said: "We don’t forecast the ringgit. All we can forecast is continued volatility (for the ringgit)."

Zeti ( right ) said the fall in the ringgit was largely expected because of capital outflows following announcements by the US Federal Reserve on ceasing of quantitative easing which refers to the cessation of bond buying by the FED to inject liquidity liquidity into the system.

The press conference became largely a question and answer session on the ringgit and 1Malaysia Development Bhd (1MDB), whose large borrowings and questionable practices are generally considered to add to the downward pressure on the ringgit in addition to falling prices of oil.

Without mentioning 1MDB by name, the governor of the central bank said that stress tests conducted by BNM show no systemic risk to the system from the borrowings of any single highly leveraged entity.

"(In the event of default), profitability of some banks may be affected but most will remain profitable. There will be no systemic collapse, capital is adequate."

She denied that a recent issue of Treasury bills by BNM of some RM2 billion was related to 1MDB.

"This (the issue) is done periodically and according to a set calendar. Treasury bills are not issued for domestic debt repayment and if it is for foreign debt repayment, the government typically informs us first."

For the full story go to KiniBiz .