Zafrul: No plans for ringgit peg, we are not in a crisis


Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

KUALA LUMPUR: Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz reiterates that there will be no peg of the ringgit to the US dollar amid the continued weakening of the local currency.

"The ringgit is influenced by the movements of currencies across the world - including the main export partners of Malaysia. We are not in a currency or financial crisis like back in 1997 which is being claimed by certain parties," Zafrul told a press conference at the 'Developing and Financing Green Housing in Asia' by Cagamas.

"There are no plans at this point in time for a currency peg to the US dollar as this has high risks and trade offs. If there is a peg - Malaysia has to follow the monetary policy of the currency it is pegged to. And as you know the monetary policy in the US - we know the direction of interest rates there," he added.

Zafrul said a peg would mean the people of Malaysia would need to pay a high cost to maintain this peg even though the economic situation here is not the same as what it is like in the US.

"This would also necessitate capital controls to prevent currency outflows. This would affect foreign investor sentiment towards this country. Even though the ringgit has fallen - other currencies have also fallen - the Japanese Yen, British Pounds etc," Zafrul said.

"The Yen for example has fallen to its lowest level in about 24 years, the Sterling is at its lowest level in about 37 years," he noted.

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