KUALA LUMPUR: Malaysia is not experiencing an economic crisis just because the ringgit is trading at a low level against the United States (US) dollar, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
He explained that the ringgit’s performance should be viewed holistically, not just in comparison with the US dollar, as the local note has also strengthened against other currencies.
“While the ringgit has depreciated by 7.5 per cent against the US dollar since the beginning of 2022, many currencies in the region and developed countries have also fallen against the greenback.
“For example, the Japanese yen has slid 19.2 per cent, the lowest in 24 years; the pound sterling has dropped 14.4 per cent, the lowest in 37 years; and the euro has weakened by 11.7 per cent, the lowest in 20 years,“ Tengku Zafrul said in a video posted on his social media page.
Although the currencies of these countries have declined in value against the US dollar, they -- including the European Union and Japan -- are not experiencing an economic crisis, he said.
The ringgit has strengthened compared with the currencies of Malaysia’s other trading partners, he noted.
Among others, the ringgit has risen by 14.2 per cent against the Japanese yen, 8.2 per cent versus the pound sterling, 4.5 per cent vis-a-vis the euro, 3.9 per cent compared with the New Zealand dollar, and 7.2 per cent against the South Korean won.
“The important thing is, as an exporting country, the low ringgit against the US dollar has a positive effect on the country’s export revenue.
“So do not look at just one aspect. Ask Malaysian exporters ... they are all happy as their exported products have become more competitive,“ he said.
Additionally, economic fundamentals that have continued to strengthen are important in determining the robustness of the ringgit, the minister said.
“What are the proofs (that our economy is on a solid footing)? Firstly, Malaysia’s gross domestic product (GDP) has grown for three consecutive quarters. The GDP grew by 3.6 per cent in the fourth quarter of 2021, 5.0 per cent in the first quarter of 2022 and 8.9 per cent in the second quarter,“ he said.
Tengku Zafrul said that the country’s unemployment rate of 3.7 per cent in July 2022, the lowest since the COVID-19 pandemic hit the country, is further proof that the country is not experiencing an economic crisis.
He also pointed to the Industrial Production Index which rose by 12.5 per cent year-on-year (y-o-y) in July 2022, and the sales value of the wholesale and retail trade which surged 41 per cent to RM130.7 billion in the same month.
“For the first seven months of this year alone, wholesale and retail trade was valued at RM882.1 billion, 19 per cent higher than last year,” he said.
Tengku Zafrul also noted that the country’s exports increased by 38 per cent y-o-y to RM134.1 billion in July.
He added that net foreign investment in the local stock market has amounted to more than RM8 billion and net retail investment has reached RM1.8 billion year-to-date.
The country’s inflation rate is also manageable at 2.8 per cent for the first seven months of 2022 due to price control measures, particularly through the provision of subsidies of almost RM80 billion this year.
“So, it makes no sense for some to say, despite these positive indicators, that we are in an economic crisis,“ Tengku Zafrul said. - Bernama