KUALA LUMPUR: External factors continue to drive the performance of the ringgit and regional currencies, says deputy Finance Minister Datuk Seri Ahmad Maslan.
He said one factor driving the ringgit’s performance this year was the expectation that the United States Federal Funds Rate (FFR) would remain higher for longer.
“This is happening even as the US Federal Reserve is trying to control inflation at a rate of 3.7%, having raised the FFR to 5.5%.
“It is up to Bank Negara to undertake the next action related to the overnight policy rate, but our inflation has dropped from 2% to 1.9%. So, raising the OPR is no longer relevant,” he said in Dewan Rakyat yesterday.
Malaysia’s overnight policy rate (OPR) stands at 3%.
Ahmad Maslan was replying to a supplementary question from Datuk Muhammad Bakhtiar Wan Chik (PH-Balik Pulau) regarding measures taken by the government and Bank Negara to curb the decline in the value of the ringgit against the US dollar, besides raising the OPR.
He said, according to Bernama, other factors affecting the ringgit’s value include weaker-than-expected economic performance in China and the easing of monetary policy by the People’s Bank of China, leading to weak investor sentiment.
“The latest development is the growing concerns about the potential escalation of geopolitical tensions in the Middle East, which has contributed to the strengthening of the US dollar,” said Ahmad Maslan.
