Photo: Bernama
KUALA LUMPUR: The Malaysian ringgit is currently undervalued by up to 10%, says Finance Minister II Datuk Seri Amir Hamzah Azizan.
"If we look at the analysis by bankers, it is likely that the ringgit is undervalued between 8% and 10% compared to the level where it should be at the moment,” he said.
"We feel that the ringgit will strengthen. Based on analysis by bankers, the ringgit should be at RM4.50 (against the US dollar) before the end of this year," added Amir Hamzah.
He said this when answering a supplementary question raised by Lim Guan Eng (PH-Bagan) in Dewan Rakyat on Thursday (Feb 29).
Amir Hamzah also said that there is no need to peg the ringgit against the US$ or impose currency restrictions as what was done previously during the Asian Financial Crisis (AFC) in 1997/98.
He said this was because Malaysia's economic fundamentals remain strong with economic growth projected to be between 4% and 4.5% in 2024 unlike during the AFC.
Lim asked how undervalued was the ringgit and when will the Malaysian currency reflect its fair value.
Meanwhile, Amir Hamzah said that there was positive indication of a rise in foreign investors' confidence with regard to the measures taken by the government to strengthen the economy.
"This can be seen from the performance of Bursa which has since risen 7.2%," he said.
He reiterated that Bank Negara would also step in to intervene in the foreign currency exchange to keep check on excessive outflow.
"For example, Bank Negara will sell off its US$ reserves to stem excessive weakness in the ringgit," he said.
Amir said that it is crucial to note that investors will look at the stability of a nation's economy, currency and policies when deciding to invest here.
