Govt finding ways to increase use of ringgit, says PM

KUALA LUMPUR: Malaysia is "actively and aggressively" looking at increasing the use of the ringgit to reduce trade dependency on US dollar, says Datuk Seri Anwar Ibrahim.

While acknowledging that most global trade was done in US dollars, the Prime Minister said that the country has begun using ringgit when trading with several countries in line with "dedollarisation" by increasing demand for local currency.

"I have held discussions with China and Asean nations on how we can use local currency for trade.

"This was well-received by China and some 28% of investment amounting to billions will not use the US dollar but in ringgit," he said when replying a question raised by Datuk Awang Solahuddin Hashim (PN-Pendang) in Parliament on Tuesday (Oct 10).

Apart from China, he said Malaysia has also successfully negotiated the use of ringgit for trade with Indonesia and Thailand.

To a question from Datuk Seri Dr Wee Ka Siong, Anwar said most government-linked investment companies (GLICs) and several local private companies have taken steps to conduct transactions in ringgit to increase demand for the local currency.

"It will be very challenging for the ringgit if all transactions are done in US dollars and that is why some companies are using up to 70% of local currency for their transactions," he added.

On the strength of the ringgit against the US dollar, Anwar said it has nothing to do with fundamentals but more on the US Federal Reserves’ moves to increase its overnight policy rates recently.

"The value of the ringgit is not dependent on fundamentals.

"Our growth is good, investment good, inflation and unemployment are down yet the ringgit is also down," he said.

Anwar said he had a meeting with Bank Negara governor Datuk Shaik Abdul Rasheed Abdul Ghaffour on Monday (Oct 9) night with the latter expressing a positive forecast for the ringgit by the end of this year.

"His assumption is that there will be direction towards convincing growth by the end of this year based on the data and figures we have received," he added.

Earlier, Anwar acknowledged that the ringgit had slid to -6.5% compared to the US dollar as of Oct 6.

However, he said other regional currencies such as the Japanese yen (-10.8%), Thai baht (-6.5%), Korean won (-6.4%) and Chinese renminbi (-4.7%) were also affected.

Meanwhile, Anwar, who is also Finance Minister, said he would announce several measures under Budget 2024 to help ease the cost of living not only for the lower income group but other affected groups too.

He informed the House that more than RM81bil would be spent to provide subsidies this year.

Although rationalisation is needed to address ballooning subsidy cost, he assured that it would not be at the expense of the lower income and other affected groups.