Economist Calls For New Measures To Strengthen Ringgit
KUALA LUMPUR, Oct 30 – A more concerted effort alongside new measures are needed to strengthen the ringgit, as the weaker local note will lead to higher inflation, said independent economist, Dr Suresh Kumar. “My concern is the weaker ringgit will deflate the economy and the inflation rate will go up. Therefore, we need to introduce another strong ringgit policy,” he told Bernama after the Post 2018 Budget Dialogue at the University Malaya Faculty of Economics and Administration here today.
Prime Minister Datuk Seri Najib Abdul Razak had put the 2018 inflation forecast at 2.5-3.5% and 3.0-4.0% for 2017 during the Budget 2018 announcement yesterday. According to Suresh, the various measures unveiled by Bank Negara Malaysia (BNM) last December should have supported the ringgit, but, it was far from a favourable level.
“I thought it would move toward 3.80 against the US dollar.However, until now, the ringgit is still trading at the 4.20 level,” he said. Suresh also noted that the elements pressuring the local currency should be looked into. “I’m talking about the ringgit to US dollar conversion for the capital account, which right now, is only applicable to Malaysia’s current account,” he said.
Asked if the ringgit should be internationalised to attract more demand for it, he said the move is unnecessary, as it would not affect the performance significantly. Last year, the central bank adopted a prudent monetary policy which included the management of the exchange rate, allowing residents to freely and actively hedge their US dollars and Chinese renminbi with an exposure of up to a limit of RM6 million per client per bank.
Apart from that, residents with domestic ringgit borrowings, are free to invest in foreign currency assets both onshore and abroad, up to the prudential limit of RM50 million for corporates and RM1 million for individuals. Another measure was to allow exporters to retain only up to 25% of export proceeds in foreign currency and the remaining 75% in ringgit. — Bernama
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