The Malaysian ringgit is turning out to be the best-performing currency in the region, so far this year. This is a sharp reversal of its fortunes, after being heavily sold down in November-December last year.

I believe this has much to do with our improved exports and outlook, and in particular Bank Negara’s new ruling (announced in December), which mandates that at least 75% of all export proceeds to be converted into the local currency.

Prior to this, many exporters kept their sales in US dollars, either onshore (in foreign currency accounts) or offshore. There are reasons for this, such as to pay for future imports of raw material, intermediate goods and capital equipment, as well as to repay foreign currency loans – and perhaps also on speculations that the longer-term downtrend of the ringgit will persist.

The result has been stagnant forex reserves for the country despite its running …