KUALA LUMPUR: The ringgit was in first place compared to nine other regional countries since the coordination measures among the government, Bank Negara Malaysia (BNM), government-linked investment companies (GLIC) and government-linked companies (GLC) were implemented on Feb 26.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the local currency’s performance was based on data from BNM’s Financial Markets Committee on March 1, which stated that there was an immediate impact on market trends and increased market interest in the ringgit.
“The government is committed to ensuring that the performance of the ringgit is at a better and stronger level,“ he told the Dewan Negara today.
He said various measures have already been taken, and that BNM always ensures that the domestic foreign exchange market remains orderly and maintains financial stability. The Malaysian central bank also continues to monitor the financial market and take necessary measures, including intervention in the foreign exchange market, to curb excessive currency movements.
In addition, Amir Hamzah said, BNM monitors the conversion of export revenue into ringgit by exporting companies and continues to encourage the use of local currency for export settlement so that dependence on the US dollar can be reduced.
He said the Ministry of Finance and BNM have taken integrated and coordinated actions to bring money into the foreign exchange market. “Among them are encouraging GLIC and GLC to bring back foreign investment income and convert the income to the ringgit more consistently.”
Amir Hamzah said the government also controls overseas investment by private companies to reduce pressure on the ringgit, and this includes encouraging them to prioritise domestic investment and delaying new overseas investment.
“Overseas investment must be managed prudently such as protecting the value (of the ringgit) through hedging foreign currency exposure and bringing back the proceeds of overseas investment.”
He added that besides the joint measures with BNM, the government is focusing on economic reform efforts which will indirectly strengthen the economic performance and the ringgit.
“The government has introduced the Madani Economic Framework, with the main pillar being to restructure the economy to emerge as a leader in Asia. The Madani economy focuses on ensuring Malaysia is a competitive investment destination,“ he said.
Meanwhile, Amir Hamzah said, in dealing with the issue of the value of the ringgit, all parties should play their respective roles and Malaysians are expected to adopt a “Malaysia First” attitude as daily consumers.
“Buy Malaysian goods and services, as well as invest in unit trusts and domestic hedge investments,“ he said, adding that the campaign to travel within the country and buy local goods will continue to be increased because it helps strengthen the ringgit and improve economic performance.
He said that to encourage the influx of foreign tourists, the government has taken steps, including exempting visas for 30 days for Chinese and Indian citizens from December 2023.
Amir Hamzah also said that government has no plans to peg the ringgit at this time.
Looking at the pegging of the ringgit around 1998, he said, the economic conditions at that time were different compared to now.
He explained that in 1998, the stock market had plunged by 76%, but now from the start of this year, the stock market has risen 6%, while foreign debt in 1998 was more than 16% of the gross domestic product but currently, it is only 2% or 1%.
Moreover, Bank Negara’s reserves today are much higher than in 1998.
“Therefore, (there’s) no need for us to react hastily. The government is indeed sensitive to the issue of the ringgit and will strive to address it,” he said during a question-and-answer session.
Amir Hamzah said analysts also opined that the ringgit will stabilise this year to a better level and possibly to the 4.50 level against the US dollar. “Under the Madani Economy Framework, we believe the ringgit will perform better in the future,” he added. – Bernama
