The Malaysian ringgit climbed against the euro today after the central bank lifted its benchmark Overnight Policy Rate for the first time in more than three years, signaling about optimistic outlook for the nation’s economy. The currency struggles to maintain the rally and remained below the opening level against the US dollar.
The Bank Negara Malaysia raised its main interest rate by 25 basis points to 3.25 percent today. The central bank was optimistic about the global economy and said regarding the Malaysian economy:
Latest indicators point to continued strength in exports and private sector activity. Going forward, the overall growth momentum is expected to be sustained.
The BNM suggested that the global recovery should help exports, while income growth and favorable labor market conditions should help private sector. As a result, the bank concluded:
The prospects are therefore for the Malaysian economy to remain firmly on a steady growth path.
Taking into account these considerations and also the inflation outlook, the central bank announced:
Amid the firm growth prospects and with inflation remaining above its long-run average, the MPC decided to adjust the degree of monetary accommodation. This normalisation of monetary conditions also aims to mitigate the risk of broader economic and financial imbalances that could undermine the growth prospects of the Malaysian economy.
Malaysia is the first South Asian nation to hike its interest rates this year.
EUR/MYR traded at about 4.3278 as of 19:32 GMT today after opening at 4.3281 and falling to 4.3187. USD/MYR advanced from 3.1728 to 3.1815 following the drop to 3.1673.
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