MUFG: BNM FX Support Tempers Ringgit Downside, Caps Upside
Analysts at MUFG note that the Malaysian Ringgit rose 0.4% vs the USD after Bank Negara Malaysia reintroduced a 2024-style FX support measure aimed at encouraging repatriation and conversion of offshore funds. The policy is seen as limiting further downside but also capping upside potential.
Lloyd Chan at MUFG observed that the Malaysian Ringgit outperformed on the day, gaining 0.4% against the US dollar. The move followed Bank Negara Malaysia's reintroduction of a foreign-exchange support measure reminiscent of its 2024 policy, which incentivizes repatriation and conversion of offshore holdings.
The analysts view the measure as a stabilizing force that tempers downside pressure on the ringgit, but note it simultaneously caps the currency's upside. The policy effectively creates a floor while preventing excessive appreciation, leaving the ringgit's near-term trajectory range-bound.
Source: FXStreet Forex News