Second Finance Minister Datuk Seri Johari Abdul Ghani said the increase was attributed to several factors, including the rise in the Brent crude oil prices in the first six months of this year and the inflow of non-resident portfolio funds into the Malaysian financial market.
As with any currency exchange rate movement, he said this would generate profits or losses to a particular sector as a stronger ringgit would reduce the cost of doing business with high-import content, reduce the prices of imported goods and further promote domestic spending.
He said the appreciation of the ringgit since the beginning of this year was attributed to the increasingly positive Malaysian economic indicators, namely higher export growth and higher Gross Domestic Product (GDP).
“The increasingly favourable economic activity also helped boost investor sentiment and further support the strengthening of the ringgit,” he said when responding to a question from Datuk Seri Ahmad Hamzah (BN-Jasin).
At 9 am, the local unit stood at 4.2815/2855 against the greenback compared with last Friday’s close of 4.2820/2850.
In addition, Johari said market development measures introduced at the end of 2016 and in April 2017 by the Financial Market Committee and Bank Negara Malaysia also contributed to the stability of the ringgit and played a role in balancing supply and demand of foreign currencies in the local currency market.
He said the impact of market development measures introduced in late 2016 could be seen where non-deliverable forward activity contracts in offshore markets decreased, while the ringgit volatility was significantly reduced.
To another question from Ahmad on the double impact of crude oil prices, Johari said the Brent crude oil price rose to US$52.20 (RM223.44) per barrel in the first six months of 2017 from US$ 40.16 per barrel in the same period a year ago.
The increase was also to due to production cut by major oil-producing countries to avoid falling prices besides a recovery in global demand, Johari said.
“Although Brent oil price plunged to US$48.42 a barrel in January 2015 and continued to remain low until the end of 2016, Malaysia’s economy recorded a strong growth of five per cent in 2015 and 4.2 per cent in 2016,” he said.
Johari said the growth was supported by diverse economic structures where the services sector contributed 54.3 per cent to GDP followed by the manufacturing sector at 23 per cent and the mining sector at nine per cent. — Bernama
Source: The Malay Mail Online