KUALA LUMPUR (Reuters) – Malaysia’s central bank said on Friday that Malaysia will not impose capital controls or peg the ringgit to the US dollar, as the currency is trading near a 24-year low.
The ringgit is down about 9% this year, in line with the decline in other emerging market currencies, as the US dollar strengthened.
“Instead of resorting to capital controls or re-pegging the ringgit, the priority of the policy now is to maintain economic growth in a price stability environment and further strengthen domestic economic fundamentals through structural reforms,” Nour Shams Governor Muhammad Yunus said in a statement. statement.
“This will provide more permanent support for the ringgit,” she added.
The central bank also said it will continue to monitor closely and ensure orderly financial market conditions amid a strong dollar.
The ringgit was trading at 4.568 per dollar on Friday. It had fallen to 4.569 on Thursday, its lowest level since January 1998.
In 1998, during the Asian financial crisis, Malaysia had pegged the ringgit at US$3.8 and imposed capital controls. It was eventually removed in 2005.
This week, Malaysian Finance Minister Tengku Zafrul Aziz also ruled out the ringgit peg, saying such a move would be too risky and lead to capital outflows.
The Malaysian economy is gradually recovering from the effects of the pandemic, although global risks will affect growth in the future.
The economy grew at its fastest annual pace in a year in the second quarter, supported by expansion in domestic demand and resilient exports.