Bank Negara Malaysia Holds OPR at 3% at Final 2024 Meeting, Sees US Election Adding Ringgit Volatility
Malaysia's central bank, Bank Negara Malaysia (BNM), kept the Overnight Policy Rate (OPR) unchanged at 3% on Nov 6, 2024, at the sixth and final Monetary Policy Committee (MPC) meeting of the year, extending the run of consecutive holds recorded through 2024.
Sixth and final MPC meeting of 2024 ends with a hold
Bank Negara Malaysia left the OPR at 3% at its sixth and final MPC meeting of 2024, The Edge Malaysia reported on Nov 6, 2024. The decision kept the policy rate at the level it had held all year: at the second MPC meeting of 2024, convened in March, the OPR was kept unchanged at 3% for a fifth consecutive time — an outcome that 19 economists surveyed by Bloomberg had unanimously predicted, according to The Edge Malaysia's earlier coverage.
The November decision therefore closed the 2024 meeting cycle with the rate still at 3%, and with the committee's attention turning to the currency rather than to the level of borrowing costs.
The ringgit: external factors come first
Alongside the rate decision, BNM said the ringgit was still driven mainly by external factors. The bank added that the outcome of the election in the United States "could heighten volatility in the near term", placing the currency's near-term path largely outside the reach of domestic policy.
What BNM sees supporting the ringgit
At the same time, the central bank listed the forces it expects to work in the currency's favour:
- narrowing interest-rate differentials with advanced economies;
- favourable economic prospects;
- ongoing structural reforms;
- coordinated repatriation and conversion of foreign income by government-linked companies (GLC) and government-linked investment companies (GLIC), flagged earlier in 2024 as a source of support for the ringgit.
According to BNM, this combination — narrower rate differentials together with favourable prospects and structural reforms — would continue to support the ringgit even as external events set the tone of trading.
Context from earlier in 2024: an "undervalued" ringgit
The November hold followed a year in which the currency, not the rate, carried the policy debate. At the March 2024 meeting BNM shifted its description of the ringgit, calling it undervalued against economic fundamentals — a change of wording that framed the subsequent discussion of what would close the gap between the market price and the bank's assessment.
Forecasts cited in March 2024
- Maybank: 4.40 ringgit per US dollar;
- MIDF: an average of 4.38 ringgit per US dollar;
- MIDF: 4.20 ringgit per US dollar by the end of 2024.
Taken together, the March forecasts and the November statement describe the same picture from two ends of the year: a policy rate held at 3% meeting after meeting, and a currency whose direction BNM attributes chiefly to forces abroad — with the US election named in November as the nearest source of added volatility.
Leave a comment