Malaysian government strives to strengthen value of local currency

The clarity of policies including for the Madani economy framework that anchor the comprehensive restructuring of the Malaysian economy, the National Energy Transition Roadmap (NETR), and the New Industrial Master Plan 2030 (NIMP 2030) can help in attracting investments and strengthening the value of the ringgit (MYR), Prime Minister Anwar Ibrahim said at the Dewan Rakyat (lower house) on October 10.

The MYR’s performance in 2023 was largely driven by external factors such as the sharp strengthening of the USD spurred by higher US interest rates as well as China’s weaker-than-expected economic conditions, he said, adding most of the world’s currencies have experienced depreciation for the year, including MYR.

The currency’s value does not depend on fundamentals such as good economic growth, good investment, falling inflation or falling unemployment rates, and the falling value of the MYR is not in line with the economic policies introduced by the government.

By only strengthening the local economy can help increase the MYR’s value, he said, highlighting that Malaysia is taking the approach of not increasing the overnight policy rate (OPR) on consideration of the increase in the value of the USD.

Besides, the government, through the Bank Negara Malaysia (BNM), has carried out short-term measures to ensure that the MYR’s adjustment is in order.

In a bid to cope with the volatility of the foreign exchange market, the BNM will continue to manage risks from domestic and external developments, as well as be prepared to use its operational policy instruments to ensure orderly market conditions.

Several steps were taken by the BNM, including setting exports in MYR.

Indonesia, Thailand and China have accepted payment in MYR, he highlighted, noting that Malaysia was also one of the first countries to sign a currency arrangement agreement with the People’s Bank of China (PBOC) in 2009, which facilitates the use of yuan and MYR for trade and payment purposes between the two nations.

Anwar also admitted that it is difficult to completely stop the use of the USD in trade at this time./.
VNA