New fix for your ringgit

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PETALING JAYA: In a move that Bank Negara views as a trading mechanics representing demand and the real supply for the ringgit, a fresh methodology that is repairing will come into effect beginning July 18.

What this means is the present system, where the exchange rate between the US dollar and the ringgit is fixed based on quotes by national banks that are chosen, will be discontinued. Additionally, at about 11am, the exchange rate is established under the current system. The NDF marketplace is settled in US dollars but traded.

Money analysts said that the moves in the NDF market would not influence the ringgit. This is because it’s according to the quantity traded between the banks. It’s based on demand and the real supply of the money,” said the analyst.The analyst said the NDF marketplace gives the perspective on the opinions on the forward movements of the ringgit.

Bank Negara said the new methodology was better represented daily trades and more clear. National financial institutions source from on-line reporting the marketplace transaction data. The new methodology is better exemplify underlying trades during the day and clear,” it said.

The central bank also said that one hour will also extends the official closing hour for the onshore ringgit marketplace to 6pm successful on an identical date. Bank Negara said this would give companies additional time to finish their foreign exchange trades. Yet, the onshore market participants continue to negotiate after the official last hour,” it said.

Although it’ll be successful only the Kuala Lumpur USD/MYR Reference Rate will be released under a concurrent trial on the Reuters page KLMYRREF beginning from June 20. Bank Negara said this concurrent interval allowed for the marketplace transition procedure. On MYRFIX02, the reference rate will suppose the present PPKM RM page on the effective date and continue afterwards.

FMA and bank Negara said which they anticipated a smooth migration with no disruptions. FMA president Lee K Kwan said the reference rate, which is founded on marketplace transaction data as an alternative to the entry of quotes by selected banks in the preceding methodology, represents all interbank forex trades conducted during the trading interval. The US dollar is elevated by this initiative/ringgit FX standard rate setting procedure to international best practices, ensuring the FX area reference rate is well received domestically and globally, leading to the further development of the Malaysian financial markets,” he included.

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