We’re not headed towards a currency crisis, says Finance Minister


KUALA LUMPUR: Bank Negara Malaysia will not take any drastic intervention to manage the value of the ringgit, says Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

“Although Bank Negara is not targeting any exchange rate, it is striving so that there will be no drastic or extreme change to the value of the ringgit.

“This action will assist businesses to plan, while allowing for better implementation of business decisions and investments,” he said in reply to a question by Wong Hon Wai (PH-Bukit Bendera) in the Dewan Rakyat yesterday.

Wong had wanted to know the measures being taken by the government through Bank Negara to mitigate the risks involving foreign currency exchange rates.

He said that one US dollar was worth RM2.122 during the 1998 Asian Financial Crisis, but the ringgit is now trading at 4.651 to the dollar currently.

Tengku Zafrul said the nation’s economic fundamentals remained positive despite the challenges to the global economy brought about by the Covid-19 pandemic.

He cited the introduction of dynamic hedging as an example of reducing risks for those in the currency market and business.

He added that this included attracting investors to the local bond market while improving the foreign currency exchange.

“Daily foreign exchange transactions continued to increase to an average of US$13.3bil to date, compared with US$11.3bil in 2021, based on two-way transactions.”

Tengku Zafrul also said that the Malaysian economy is not headed for a crisis because the situation during the 1997/98 Asian Financial Crisis was different.

“Our currency dropped almost 54% in 1997, with the lowest exchange rate hitting RM4.88 to the dollar.

“The nation’s share market was also badly affected, where the then Kuala Lumpur Stock Exchange fell by some 800 points in just two months from 1,077 in June 1997 to 262.7 in September,” he said, describing it as the worst economic crisis ever faced by the nation, resulting in 102,000 Malaysians losing their jobs.

He noted that Bank Negara had also raised the interest rate to 11% to overcome the ringgit’s devaluation and to control inflation.

He said the situation is different now as the nation’s economy is more diversified and resilient.

“To date, our permanent account remains positive, with a total of RM3bil in the first quarter and RM4.4bil for the second quarter.

“As such, although we are facing some challenges due to external factors beyond the control of the government, our nation isn’t facing or headed towards an economic or currency crisis,” he said, adding that several other nations are also facing economic challenges due to current global events.

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