Ringgit will strengthen to RM4.50 against US dollar by year-end, says minister
Published on: Thursday, February 29, 2024
By: Bernama
Second finance minister Amir Hamzah Azizan said the ringgit’s current depreciation is largely driven by the strengthening of the US dollar and the uncertainty over China’s economic growth. (Bernama pic)
Kuala Lumpur: The ringgit is expected to continue to strengthen this year, trading at RM4.50 against the US dollar by the year-end, driven by the country’s positive economic performance, says second finance minister Amir Hamzah Azizan.
He said coordination between the finance ministry and Bank Negara Malaysia (BNM), as well as joint efforts between GLCs and GLICs, will help increase inflow into the foreign exchange market and strengthen the ringgit’s value.
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Amir also said BNM is also always ready to intervene in the foreign exchange market to curb excessive currency movements.
“For example, BNM will sell US dollars from its reserves to curb excessive weakness of the ringgit.
“The government’s efforts will be effective. There is no need to use instruments such as pegging the ringgit or shutting down the ringgit exchange, as was done during the Asian financial crisis,” Amir said during Question Time in the Dewan Rakyat.
He said this in reply to a supplementary question from Lim Guan Eng (PH-Bagan), who wanted to know the government’s projections for the local currency’s recovery and the steps taken by BNM to strengthen its value.
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Amir said the ringgit’s current depreciation is largely driven by the strengthening of the US dollar and the uncertainty over China’s economic growth, which has also affected other regional currencies.
As of Feb 28, the ringgit has depreciated 3.5% against the US dollar, in tandem with regional currencies such as the Japanese yen (-6.3%), the Thai baht (-4.7%) and the Korean won (-3.3%).
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According to analysts, the ringgit’s value is currently 8-10% lower than what it should be right now, he said.
Amir said BNM also monitors the conversion of export proceeds into ringgit by exporting companies, and is continuing efforts to encourage the ringgit’s use for export settlements to reduce dependence on the US dollar.
“The government also controls overseas investments by private companies to reduce pressure on the ringgit, including encouraging them to prioritise domestic investments as well as delaying new overseas investments.
“Foreign investments also need to be managed prudently by hedging foreign currency exposure and bringing back proceeds from overseas investments to reduce the high pressure on the ringgit,” he said.
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