The Malaysian Ringgit has been steadily appreciating against the US Dollar, particularly since early July, as clarity has increased regarding the interest rate trajectory of developed countries, especially the United States, according to Bank Negara Malaysia (BNM).
Deputy Governor Adnan Zaylani Mohamad Zahid noted that the narrowing interest rate differentials with the US would encourage portfolio inflows, especially in light of Malaysia's positive economic outlook, Business Times reports.
“The domestic landscape is also quite positive. Ongoing government structural reforms, subsidy rationalisation and social protection enhancements offer a window of opportunity to pursue meaningful change.
“Furthermore, the coordinated actions between the government and BNM, which has already facilitated a better balance for (fund) flows, will continue and this will provide sustainable support for the Ringgit,” he said at the IFN Asia Forum 2024.
“Importantly, ongoing structural reforms by the government, coupled with improving economic prospects, will continue to sustain global interest for investment in Malaysia,” the Deputy Governor added.
Moreover, Zaylani cited sustainability as a critical priority for Malaysia, highlighting that the country has already established its goals and initiated plans to optimise various sukuk structures to facilitate a smooth transition to a sustainable economy, especially for emerging markets.
He pointed out that Asia requires approximately $1.7 trillion annually for new infrastructure, with a notable $800 billion shortfall in climate financing, particularly in the renewable energy sector.
To achieve net-zero targets by 2050, more than $138 billion will be needed over the next five years, which is double the current levels of investment.
“Government revenues alone cannot meet these needs. Sukuk has the potential to catalyse wider funding sources in this space both for the government and private sector,” he said.
In Malaysia, sukuk serves as a crucial funding instrument to address the economy's financing requirements. In 2023, a total of $56 billion in sukuk was issued, with a significant focus on renewable energy and green real estate projects.
“I believe there is a great opportunity to further leverage Asia's strength in sustainability bond issuance by synergising with Malaysia's expertise in Islamic finance. The region also held a 23% share of the global ESG sukuk market, underlying its potential to advance Islamic sustainable finance.
“Malaysia, in particular, has been at the forefront of this movement, continuing to lead with innovative strides in the market and since pioneering the world's first green sukuk in 2017,41 corporate sukuk have been issued under the Sustainable and Responsible Investment Sukuk Framework, raising over $6.67 billion,” he added.