Malaysia works to strengthen local currency

Illustrative image (Photo: Bernama)

Kuala Lumpur (VNA) - Malaysia's ringgit is expected to continue to strengthen this year, trading at 4.5 RM against the US dollar by year-end, driven by the country’s positive economic performance, Finance Minister II Amir Hamzah Azizan has said.

Coordination between the Ministry of Finance and Bank Negara Malaysia (BNM), as well as joint efforts between government-linked investment companies (GLCs) and government-linked companies (GLICs) will help increase inflow into the foreign exchange market and strengthen the ringgit’s value, he said at the question and answer session in the House of Representatives.

He also said BNM is also always ready to intervene in the foreign exchange market to curb currency movements that are considered excessive.

According to Azizan, the efforts made by the government are effective and there is no need to use instruments such as pegging the ringgit or shutting down the ringgit exchange as was done during the Asian Financial Crisis.

He said the ringgit’s current depreciation is largely driven by the strengthening of the US dollar and the uncertainty over China’s economic growth, which has also affected other regional currencies.

As of February 28, the ringgit has depreciated 3.5% against the US dollar, in tandem with regional currencies such as the Japanese yen (-6.3%), the Thai baht (-4.7%) and the Korean won (-3.3%).

Azizan said BNM monitors the conversion of export proceeds into ringgit by exporting companies, and is continuing efforts to encourage the ringgit’s use for export settlements to reduce dependence on the US dollar.

The government also controls overseas investments by private companies to reduce pressure on the ringgit, including encouraging them to prioritise domestic investments as well as delaying new overseas investments, he added./.