Financial markets remain efficient with ample liquidity


BANK Negara Malaysia’s (BNM) Financial Markets Committee (FMC) has announced that the financial markets continue to function efficiently with ample liquidity amid recent political developments in the country.

“Foreign-exchange (forex) transaction volume remains healthy at US$14.6 billion (RM61.8 billion) supported by two-way flows, while the US dollar/ringgit one-month implied volatility remains within normal range of around 4%-4.5%.

“The US dollar/ringgit opened higher and traded in an orderly manner throughout the day, in line with broad market expectation and consistent with the performance of regional currencies amid the global outbreak of Covid-19,” it said in a statement yesterday.

The central bank stated the increased interest rate led to the US dollar/ringgit interbank forex volume to double from last week’s average.

In the ringgit fixed income market, it said yield adjustments for the benchmark Malaysian Government Securities have been orderly, with the five-year and 10-year yield levels recovering from their initial upward movements.

“The overall secondary bond market recorded a healthy daily trading volume of RM5.9 billion compared to daily average of RM4.7 billion in 2019,” it said.

Financial Market Association of Malaysia (FMAM) president Chu Kok Wei said the orderly manner, in which the ringgit forex and bond markets are functioning, reflects the maturity of the Malaysian financial markets.

“There is sufficient liquidity to fulfil all stakeholders’ needs, as reflected in higher transaction volumes concluded. FMAM and its member institutions are committed to ensuring the effectiveness and efficiency of market operations,” Chu said.

The FMC will continue to monitor developments in the financial markets to ensure that all business and transaction needs are met.

In an earlier statement, the central bank said it is closely monitoring conditions in the financial markets following the political turmoil that has been unfolded in the country.

“While ringgit movements will continue to be market determined, BNM’s market operations will ensure sufficient liquidity and orderly financial market conditions,” it stated.

The Securities Commission Malaysia (SC) is also closely monitoring the ongoing developments in the capital market given the current domestic and global situations.

The commission said well-capitalised market intermediaries, healthy levels of liquidity in the fund management industry and robust market infrastructure will continue to drive resilience and cushion the capital market from external shocks.

“The SC will remain vigilant and continue to monitor the market to ensure that it operates in a fair and orderly manner,” SC said.