{"id":14568,"date":"2022-08-11T14:27:19","date_gmt":"2022-08-11T06:27:19","guid":{"rendered":"https:\/\/newmalaysiatimes.com\/?p=14568"},"modified":"2022-08-11T14:27:20","modified_gmt":"2022-08-11T06:27:20","slug":"no-need-to-peg-ringgit-to-us-dollar-economic-fundamentals-will-support-rm-tengku-zafrul","status":"publish","type":"post","link":"https:\/\/newmalaysiatimes.com\/?p=14568","title":{"rendered":"No need to peg ringgit to US dollar, economic fundamentals will support RM – Tengku Zafrul"},"content":{"rendered":"\n

KUALA LUMPUR, Aug 11<\/strong> — The government has no plans to peg the ringgit to the US dollar as such a move is fraught with high risks and a large trade-off, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.<\/p>\n\n\n\n

He said a peg would not be the best move for the economy as it would require Malaysia to follow the monetary policy of the country to which the ringgit is pegged to.<\/p>\n\n\n\n

\u201cFor example, if the ringgit is pegged to the US dollar, Malaysia\u2019s overnight policy rate would have to follow that of the US Fed, which will raise its interest rate by 325 basis points, or 3.25 percentage points overall in 2022, although Malaysia\u2019s economic recovery and inflation levels are different than that of the US.”<\/em><\/p>\n\n\n\n

\u201cMalaysia would face constraints in setting the monetary policy and Malaysians would have to bear the high financing cost although the economic situation here is different from that of the United States,\u201d<\/em> the finance minister told\u00a0Dewan Negara today.<\/p>\n\n\n\n

He stressed that the strength of a currency depends on strong economic fundamentals, noting that Malaysia has solid\u00a0fundamentals, supported by strong demand domestically and overseas, as well as rising commodity prices.<\/p>\n\n\n

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\"peg\"<\/figure><\/div>\n\n\n

This was reflected in first quarter gross domestic product (GDP)  growth of 5 per cent, with an expected better performance in the second quarter.<\/p>\n\n\n\n

Tengku Zafrul said if the peg is implemented, it would have to be accompanied by capital controls to prevent capital outflows, and that would affect foreign investor confidence.<\/p>\n\n\n\n

A flexible ringgit exchange rate is important to balance the need to absorb external shocks and support the Malaysian economy amid global uncertainty, he added.<\/p>\n\n\n\n

\u201cHence, the government through Bank Negara Malaysia (BNM) will ensure that financial markets are\u00a0stable and efficient and we will take proactive measures to ensure sufficient liquidity and resilience to prevent destabilisation in the ringgit\u2019s value.”<\/em><\/p>\n\n\n\n

\u201cContinued monitoring will be done by\u00a0BNM to ensure an an orderly forex market and prevent volatile\u00a0moves in the ringgit,\u201d <\/em>he said, adding that\u00a0\u00a0the central bank is ready to use policy instruments in the forex market to prevent volatility in the ringgit.<\/p>\n\n\n\n

NMT<\/a> as reported by Bernama<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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