Anwar, Asean central banks put squeeze on BNM

[superadmin]

PETALING JAYA: Investors are holding their breath as Bank Negara Malaysia’s (BNM) monetary policy committee (MPC) is set to announce its overnight policy rate (OPR) decision today at the conclusion of its two-day meeting.

With the ringgit falling to historic lows, the central bank is facing increased pressure to hike the OPR to defend the plunging local currency.

The ringgit weakened to 4.7958 last week against the surging US dollar, the lowest in more than 25 years. It had since climbed slightly to close at 4.7695 yesterday. Year-to-date, it is the worst-performing currency after the Japanese yen, having dropped more than 8% against the dollar.

The situation, however, is not unique to the ringgit. Neighbouring Asean countries recently surprised observers by raising their respective lending rates to support their weakening local currencies.

Indonesia and the Philippines hiked their respective lending rates to 6% and 6.5%. Meanwhile, Thailand raised its key lending rate to 2.25%, the highest level since January 2014.

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