Malaysia applies flexible exchange rate to support economy

Kuala Lumpur (VNA) – The Malaysian finance minister has said a flexible ringgit exchange rate is important to absorbing external shocks to support domestic economic activity.

In a recent statement, Minister Zafrul Tengku Abdul Aziz said the Malaysian Government, through Bank Negara Malaysia (BNM), will always ensure stable and smooth financial market conditions and take proactive measures to provide adequate liquidity and resilient markets to ensure the stability of the ringgit.

Ongoing monitoring has also been carried out by the central bank to ensure an orderly foreign exchange market condition and avoid significant fluctuations in the ringgit exchange rate, he said, adding that the government will continue to manage domestic and external development risks.

The minister noted compared to the Asian economic crisis in 1997 and 1998, Malaysia is not in a state of financial or economic crisis. Therefore, the government, through BNM, has no intention to peg the ringgit against the US dollar at the moment as the move has a huge risk.

Although the ringgit had weakened by 8.7% against the US dollar since the beginning of 2022, other currencies have also depreciated at a more significant rate, including the Japanese yen, British pound, and Euro.

He held that the strengthening of the US dollar is a major factor that has influenced the global and regional foreign exchange movement./.