Bank Negara Malaysia’s new measures to enhance the liquidity in the foreign exchange market, to stabilise the declining ringgit, is seen as an appropriate move, says a World Bank economist.

Country economist Shakira Teh Sharifuddin said as the organisation responsible in managing the country's monetary policy, it was the central bank’s prerogative to implement measures to stimulate the weakening ringgit.

“The central bank is doing what needs to be done,” she told reporters on the sidelines of the National Economic Outlook Conference 2017-2018 in Kuala Lumpur today.

The measures announced on Friday included allowing residents, including resident fund managers, to freely and actively hedge their US dollars and Chinese renminbi with an exposure of up to a limit of RM6 million per client per bank.

Residents with domestic ringgit borrowings are free to invest in foreign currency assets, both onshore and abroad, up to the prudential limit of RM50 million for corporates and RM1 million for individuals.

Another measure which took effect on Monday was to allow exporters to retain only up to 25 percent of export proceeds in foreign currency and the remaining 75 percent in ringgit.

Meanwhile, on Malaysia’s economic outlook, she said the country’s economic growth was projected to trend upwards until 2018, driven by internal demand.

She said Malaysia’s economy was forecast to grow by 4.2 percent this year, followed by 4.3 percent next year and 4.5 percent in 2018.

“Growth will be driven by private consumption while external demand will still be subdued,” she said.

The two-day conference, organised by the Malaysian Institute of Economic Research, discussed various issues including Gross Domestic Product growth, green economy, trade and Malaysia’s progress towards 2020.

- Bernama

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