PUTRAJAYA has the right mechanisms in place to ensure that the ringgit will not slide further as the local currency continues to trade lower against the US dollar following Donald Trump’s presidential victory.
Deputy Finance Minister Lim Hui Ying said the government is aware that the ringgit and the currencies of emerging markets are being affected by the current geopolitical situation in the Middle East and also the recently concluded US presidential election.
“Despite that, the positive prospects of the Malaysian economy, which include the government’s commitment to carry out structural reforms, will give continuous support to the ringgit,” said Lim during the Question and Answer session.
Lim also said Bank Negara Malaysia (BNM) is always ready to intervene in the foreign exchange market to stem currency movements that are deemed excessive.
“The government and BNM have also taken proactive steps to promote the use of local currency in international trade and investment.
“This allows efficient trade in the foreign exchange market,” said Lim.
The ringgit is being closely watched after it was one of the best performing currencies in Asia, at one point trading at 4.115 against the US dollar in September.
According to Lim, the government also plans to capitalise on its Asean chairmanship next year to promote the ringgit.
“The government will lead efforts to widen the use of regional currencies with other Asean countries,” added Lim.
Lim also said Malaysia is set to benefit from its involvement in BRICS, the Organisation for Economic Co-operation and Development (OECD), as well as the Asia Pacific Economic Cooperation (Apec).
“Our standing at the international stage is set to improve, and it will also increase the potential of Malaysia’s trade,” added Lim.
Lim was responding to Jimmy Puah (PH-Tebrau), who asked about Malaysia’s measures to stem the ringgit’s slide following Trump’s victory.
Nazri Abu Hassan (PN-Merbok) then asked Lim about measures to address the rising cost of living affecting Malaysians.
According to Lim, the government has implemented various measures to achieve this goal, including modifying the rate and scope of the Sales and Services Tax (SST), implementing targeted subsidies, and more.
Lim said the government is expecting the rise in cost of living to be under control.
“We don’t deny that there will be minor increases due to external factors, the global commodity prices and issues concerning supply chains,” said Lim.
“The government is committed to considering the need to increase national revenue to ensure that the people’s prosperity is our priority,” added Lim.
Lim also said the government aims to reduce the fiscal deficit to 3% in the medium term, as outlined in the Madani Economy framework and the Public Finance and Fiscal Responsibility Act 2023 (Act 850).
According to Lim, the percentage of fiscal deficit to gross domestic product is expected to decrease 4.3% this year from 5% last year, and it is expected to decline further to 3.8% by next year.
