KUALA LUMPUR, Oct 1 – Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz told reporters at the Malaysia-OECD High-Level Global Symposium on Financial Well-Being here on Wednesday that there is still no need to peg the ringgit to the US dollar currently despite the continued downtrend of the local unit.
“If you peg the currency, something else will adjust, either prices or demand conditions, and those might have greater effects on our economy? At this point of time, the government was not envisaging any measures like capital control as Malaysia has the market mechanism that adjusted to certain economic situation,” she said.
“What we want to demonstrate is that when we have fundamentals that can allow us to adjust, then when the uncertainty subsides, our currency will regain its strength again. In the meantime, the weakening of the ringgit was the result of many factors globally and BNM would ensure that the market would remain orderly,” she said.
“For the domestic environment, we need to try to resolve all the areas of vulnerability and uncertainties to provide confidence to Malaysian and non-residents who are participating in our economy and financial system. We need to be in the position to withstand this kind of period,” she said.
On the possibility of the ringgit’s downturn affecting imports, Zeti said, BNM has not yet detected any sign of relations between those two things. She said it is demand conditions that are more important in affecting our exports and imports but she was sure that there will be threshold levels where they might have begin to have an impact.
“In the same time, we also have to monitor them and see the incoming information. So far, our track records and experiences have been shown that the demand (global and domestic), have been the key factor in affecting the exports and imports,” said Zeti said.
“On the ringgit forecast until year-end, it depended on what the development unfolded as there were a lot of uncertainty in the world currently, including when the US Federal Reserve Bank would exit from its zero-bound interest rate and energy and commodity prices. We have to demonstrate we can live under that uncertainties and survive. Even if there are any setbacks, we have shown time and again, that we are able to recover quite quickly,” she said.
