KUALA LUMPUR, Nov 1 — The government has no plans to implement ringgit pegging and accompanying measures like exchange rate controls that were done when the country faced the...
At the height of the AFC in 1998, the first Tun Dr Mahathir Mohamad administration pegged the value of the ringgit to RM3.80 to the US dollar in an effort to isolate the Malaysian economy from the financial instability sweeping over the region at the time.
“Thirdly, in order to maintain the peg we need large international reserves otherwise we will have to re-introduce capital control measures to prevent and overcome speculative pressure on the ringgit and if these capital control measures are introduced now, the negative impact on investor confidence will involve very high costs and may affect capital flow because Malaysia has a much larger capital market today compared to 1998,” Sim told the Parliament today during the Question and Answer Time.
The former PM argued that Malaysia should not refuse to fix the ringgit’s value simply because it was against international norms, saying this refusal was effectively helping forex traders profit off the depreciation of the local currency. "The government through BNM will continue to manage risks from domestic and external developments and be prepared to use its operational policy instruments to ensure a more orderly market situation,” Sim added.
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