Amir: Resilience of ringgit still remains, inflows continue

Amir: Resilience of ringgit still remains, inflows continue

The Malaysian ringgit demonstrated resilience in 2023, supported by sustained inflows into the domestic capital market and a stable macroeconomic environment. Despite global uncertainties, including geopolitical tensions and a slower-than-expected recovery in China, Malaysia’s financial system remained robust, with the capital market expanding to RM3.8 trillion by year-end, driven by growth in bonds and sukuk outstanding. Foreign investors returned to the market, contributing net inflows of RM25.78 billion in 2023, reversing the previous year’s outflows. This reflects confidence in Malaysia’s economic fundamentals, including a 3.7% real GDP expansion fueled by resilient domestic demand and a strengthening labor market.

The bond and sukuk market, which grew to RM2.00 trillion in outstanding value, played a pivotal role in attracting both domestic and international capital, with corporate spreads narrowing due to strong institutional investor demand. Meanwhile, the equity market showed mixed performance, with the FBMKLCI declining slightly but mid- and small-cap indices posting gains, signaling shifting investor sentiment toward smaller firms.

Domestically, the ringgit’s stability was underpinned by controlled inflation and a historically low unemployment rate, which supported wage growth and consumer spending. While external pressures, such as global monetary policy shifts, introduced volatility, Malaysia’s financial stress levels remained below historical averages, reinforcing the currency’s resilience. These factors collectively highlight the ringgit’s ability to withstand external shocks, supported by a capital market that continues to serve as a critical conduit for economic growth and investor confidence.