MUMBAI – Bank Negara Malaysia said the movements in the ringgit would continue to be market determined and that it will ensure orderly financial conditions amid the turbulence in global financial markets.
The decline in the ringgit to multi-year lows has been fuelled by the persistent strength of the US dollar, which has appreciated against almost all currencies, the central bank said in a statement on Friday.
“Malaysia remains an open economy. Rather than resorting to capital controls or re-pegging of the ringgit, the policy priority now is to sustain economic growth in an environment of price stability and to further strengthen domestic economic fundamentals through structural reforms,” central bank governor Nor Shamsiah Mohd Yunus said.
Bank Negara’s statement comes during a week that saw Japan’s first market intervention in over two decades to halt the yen’s drop against the dollar. The US Federal Reserve’s hawkish remarks on keeping rates higher for longer to control
inflation has piled pressure on Asian currencies, including Malaysia’s ringgit that weakened to a 24-year low.
On Friday, the ringgit was trading at 4.5732 to the US dollar at 2.35pm Singapore time, having weakened about 0.4 per cent since the Fed made its latest big rate hike. The Malaysian currency was trading at 3.2214 to the Singapore dollar, a drop of 4.3 per cent so far this year.
Malaysia has raised borrowing costs thrice this year to 2.5 per cent to fight pressures, with three South-east Asian peers, including Indonesia and the Philippines, adding to the tightening trend on Thursday.
The Philippine central bank separately signalled on Friday that it may resort to more interest rate hikes depending on the Fed’s actions while also considering active market interventions to curb currency losses. BLOOMBERG
• With additional information from The Straits Times