BNM keeps OPR unchanged at 3 percent

Economy - Pavan Pandey - Nov 30,2016

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bnm keeps opr unchanged at 3 percent

Bank Negara Malaysia (BNM) kept its overnight policy rate (OPR) at 3 percent, declaring at the Monetary Policy Committee meeting.

Malaysia’s central bank kept its OPR rate at 3 percent today at MPC (Monetary Policy Committee) meeting. It was an expected move as the bank said that, it forecasts more volatility in the financial market with the ringgit losing 5 percent against the US dollar in the two weeks since Mr. Donald Trump won the US presidential election. But many economists had estimated Bank Negara to leave the OPR unaffected at its fixed policy analysis due to the stress on the Malaysian currency. The central bank repeated its commitment to deliver liquidity to confirm smooth functioning of the domestic foreign exchange market (FXM).

After a surprise rate cut in July that powered expectations of more easing, the central bank of Malaysia is shifting its consideration to the ringgit following its fall in price since the 8th Nov US presidential elections. BNM is already closing down on the offshore trading of its currency to help slow the ringgit’s decline.

The Malaysian currency plunged for 11 straight days through Wednesday, and ringgit was trading at the lowest level since October 2015. On a different note, BNM said the Monetary Policy Committee meeting also permitted another roster of MPC meeting for 2017.

According to an economist at Capital Economics Ltd. in Singapore, Mr. Krystal Tan, “It is more worried about supporting the weak currency than boosting the sluggish economy.” The Malaysian economy remains on track to expand as planned this year and the next, the central bank stated. The growth of an economy is forecast at 4% to 4.5% in the year 2016, and in 2017 it forecast at 4 percent to 5 percent. Bank Negara Malaysia added in a statement, inflation will perhaps average at the lesser end of the 2 percent to 2.5 percent mark as this is the projected limit for the year 2016. Moreover, it is also estimated to stay relatively constant in the year 2017.