KUALA LUMPUR (Sept 28): Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said that the central bank is not facing any pressure to increase interest rate, despite the continued weakening of the ringgit.

Zeti describes the current interest rate as being “accommodative”.

“It (the current interest rate) is supporting the economic activities and we are seeing steady growth of credit, and it has not hampered borrowing from the financial system,” the governor told the media today after the launch of Financial LATeracy exhibition at Bank Negara Malaysia Museum and Art Gallery.

She stressed that current global developments are highly volatile, and Malaysia is not spared by the volatility. “This is likely to persist for some time to come, and therefore, we must have the resilience to ride out this period,” Zeti added.

Zeti noted that when the ringgit regained some strength from time to time, it is then affected by other developments around the world, such as in China, Middle East, and the US.

“Of course, we want our currency to stabilise, but this is not a static environment, but a dynamic one. Therefore, where other currencies are also adjusting, we cannot keep ours at one specific level, because it will be misaligned, given the highly dynamic environment,” she said.

The governor added that the international financial system will see some stability once the US Federal Reserve’s decision on the interest rate is clear.

Initially, however, it might trigger some instability. “Around these global developments, there are other developments in China, Middle East, as well as commodity prices. This is what the world is today,” Zeti noted.

She acknowledges that the current environment is challenging for those with exposure to foreign currencies, such as parents with children studying abroad and companies with businesses abroad. “We must learn to manage ourselves in such an environment,” Zeti added.

Commenting on Bloomberg’s story last week that Malaysia deserves a junk status by credit default swap (CDS) traders, Zeti noted that all sorts of things were said about Malaysia during the Asian Financial Crisis.

“In 1999, less than a year after the crisis, we went to tell the world our story. So this is what we must do, and investors will look at how we assess our situation, and they can make their own assessment,” said Zeti, who took over the governor’s post in 2000, noted that the country has managed to bounce back from the financial crisis that hit Asia severely in 1998.