THERE will not be a contagion effect from the falling Indonesian rupiah, which has dropped in its exchange rate by about 10% against the US dollar over the past one month, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.
“We believe the situation in Indonesia will stabilise,” she said when asked if the rupiah's sharp fall would affect the ringgit.
Indonesia has registered steady economic growth for some time. “Its (foreign exchange) reserves have doubled from the crisis years,” she added.
Furthermore, Indonesia's indebtedness is only about a third of what it was at the time. The country is also enjoying a surplus in its current account. “All these are in place for the situation to stabilise,” she said.
In Malaysia, there have not been any unusual transactions in the trading of the ringgit and Zeti said the financial system was resilient enough to deal with shocks such as the increase in oil prices.
“We don't expect a contagion effect on Malaysia. I also have confidence in the resilience of the Asean region,” she added.
Did you find this article insightful?