KUALA LUMPUR, March 19 — The government has no plans to peg the ringgit at this time, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said looking at the pegging of the ringgit in 1998, the economic condition at that time was different compared to today.
Amir Hamzah explained that then, the stock market had plunged by 76 per cent while foreign debt was more than 16 per cent of the gross domestic product (GDP).
In comparison, since the start of this year, the stock market has risen 6.0 per cent, while foreign debt is only between 1.0 and 2.0 per cent of the GDP.
“Hence, if we look in terms of the national reserves, Bank Negara Malaysia (BNM) has reserves of more or less US$114 billion. It’s much better than the US$26 billion (recorded) in 1998.
“Therefore, (there’s) no need for us to react hastily. The government is indeed sensitive to the issue of the ringgit and will strive to address it,” he said during a question and answer session in the Dewan Negara today.
Amir Hamzah noted that analysts have also opined that the ringgit will stabilise this year, possibly to the 4.50 level against the US dollar.
“Under the Madani Economy framework, we believe the ringgit will perform better in the future,” he said.
He was replying to a supplementary question from Senator Tan Sri Mohamad Fatmi Che Salleh, who wanted to know if the government was planning to peg the ringgit to control or safeguard the country’s assets.
Ringgit top regional performer
Meanwhile, Amir Hamzah said the ringgit was in first place compared to nine other regional countries since coordination measures were implemented by the government, BNM, government-linked investment companies (GLICs) and government-linked companies (GLCs) on February 26, 2024.
He said the local currency’s performance was based on data from BNM’s Financial Markets Committee on March 1, 2024, which stated that there was an immediate impact on market trends and increased market interest in the ringgit.
“The government is committed to ensuring that the performance of the ringgit is at a better and stronger level,” he told Dewan Negara.
He said various measures have already been taken, and that BNM always ensures that the domestic foreign exchange market remains orderly and maintains financial stability.
The Malaysian central bank also continues to monitor the financial market and take the necessary measures, including intervention in the foreign exchange market, to curb excessive currency movements.
In addition, he said BNM also monitors the conversion of export revenue into ringgit by exporting companies and continues to encourage the use of local currency for export settlement so that dependence on the US dollar can be reduced.
He said the Finance Ministry and BNM have taken integrated and coordinated actions to bring money into the foreign exchange market.
“Among them are encouraging GLICs and GLCs to bring back foreign investment income and convert the income to the ringgit more consistently.”
Amir Hamzah said the government also controls overseas investment by private companies to reduce pressure on the ringgit, including encouraging them to prioritise domestic investment and delaying new overseas investment.
“Overseas investment must be managed prudently, such as protecting the value (of the ringgit) through ‘hedging’ foreign currency exposure and bringing back the proceeds of overseas investment.”
In addition, he said the government is also focusing on economic reform efforts which will indirectly strengthen the economic performance and the ringgit.
“The government has introduced the Madani Economic framework, with the main pillar being to restructure the economy to emerge as a leader in Asia. The Madani Economy focuses on ensuring Malaysia is a competitive investment destination,” he said.
— Bernama
