No OPR tweak to support ringgit: StanChart

KUALA LUMPUR: It is unlikely for Bank Negara Malaysia to tweak the overnight policy rate (OPR) to support the ringgit. 

Standard Chartered (StanChart), in a note today, said the central bank is expected to keep the benchmark interest rate unchanged at 3.0 per cent. 

The local currency has had some reprieve since the start of March after underperforming in January and February. 

"Bank Negara's Financial Markets Committee recently released a statement that mentioned stepping up coordination with government-linked companies and investment companies to encourage them to repatriate foreign investment income income into ringgit more consistently. 

"This coordination is likely preferred over a tweak to monetary policy by Bank Negara to address foreign exchange as it is not seen as affecting the growth and inflation outlook at present," it stated. 

StanChart added that growth is currently soft in Malaysia whereby the economy ended 2023 on a soft note, with the fourth quarter gross domestic product  2.1 per cent quarter-on-quarter. 

"Core inflation also eased further to 1.8 per cent year-on-year in January, although upcoming changes to administrative taxes and subsidy rationalisation could add to inflation. 

"On the other side of the equation, the ringgit weakness likely limits Bank Negaras room to cut rates to support growth," it added.

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