Forwards Become Malaysia’s Favored Tool for Boosting Ringgit
- Central bank has built record net short positions in forwards
- Ringgit is Asia’s top-performing currency so far this quarter
The ringgit is currently trading around 4.7065 per dollar, having strengthened from a 26-year low of 4.8053 set in February.
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Malaysia’s central bank has been increasingly using currency forwards to support the ringgit, easing pressure on its foreign-exchange reserves.
Bank Negara Malaysia’s net forward FX position widened to negative $27.7 billion in April — reflecting a record net short position its the forward books — showing a preference for using that avenue to bolster its currency. At the same time, its foreign-exchange reserves are little changed this year.