Tuesday 19 Mar 2024
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KUALA LUMPUR (March 24): Bank Negara Malaysia (BNM) Governor Tan Sri Muhammad Ibrahim said there has never been a target level for the ringgit exchange rate. With the economy and financial markets constantly evolving, fixation on a particular level of ringgit exchange rate is "counterproductive", if not detrimental to the economy, Muhammad said.

For BNM, he said the central bank has always indicated that market forces will determine the value of the ringgit.  

"What matters for BNM and all of us here is to ensure that any adjustments taking place is done in a gradual and orderly manner, without causing undue disruptions to businesses and households. The foreign exchange market can sometimes be very fickle. Therefore, we should always remain on our guard, as the global economic and financial conditions may change rapidly following many developments such as normalisation of interest rates, geopolitical risks and the tendency to adopt policies that might curtail open trade," he said in his speech here yesterday at the Takaful Annual Dinner and Awards 2018.

"The ringgit’s recent appreciation and stability is not something that we should take for granted. What we have learnt in recent years is to never downplay the unexpected. The rapid decline in global oil prices, drastic disruptive policy shifts in major economies, and the more recent increase in trade tensions are prime examples of tail-risk events that will continue to affect our economy and the ringgit," he said. 

The ringgit was last traded at 3.9185 against the US dollar yesterday. Over the last one year, the ringgit was transacted at its weakest level against the US dollar at 4.4415 on April 10, 2017 and strongest point at 3.8663 on January 29, 2018.

In his speech yesterday, Muhammad said as a result of Malaysia's strong 2017 economic performance and improved sentiments following measures to promote a healthier and more vibrant financial and foreign exchange market, the ringgit had strengthened by 14.6% in 2017 and 2018 thus far. 

As Malaysia's economic outlook remains strong, the ringgit will continue to reflect the strength of the economy, he said.

He said the domestic economy grew strongly by 5.9% in 2017, supported by the global growth upswing and robust domestic demand. Domestic demand remained central to Malaysia’s growth, grounded on healthy income and labour market conditions, according to him. 

"This is not the fruition of just one year’s effort. It is a reflection of the successful structural changes undertaken over the last two decades. Malaysia’s shift towards a domestic demand-driven economy and continuous economic diversification have placed us in a very good position to adapt to and leverage on the changes in the global economy," he said.
 
 

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