UNABLE TO REIN IN THE RINGGIT, BANK NEGARA CHIEF NOW TELLS INVESTORS NOT TO BE ‘FIXATED’ WITH ITS ‘STABILITY LEVEL’

Economic analysts and observers should not be fixated with assessing the stability level of the ringgit, said Bank Negara governor Muhammad Ibrahim.

This is not a right and productive thing to do, he added.

“Few views were offered by the economic analysts and observers. It is as though suggesting that this is our target in ensuring the stability of the economy. This is not accurate and productive,” he said at the Finance Carnival organised by the central bank and attended by over 100 finance service providers.

“Whether the ringgit is at the right level or not, let the market’s demand and supply dictate those level. We should not be fixated on any particular level,” Muhammad later told the reporters.

Through its Dec 2, 2016 measure, he said the ringgit – which depreciated 4.3 percent against the US dollar or fell below RM4.486 in 2016 – had shown signs of stabilisation.

“It will take a few months because the stabilisation will take three to six months before it can really show some outcome, but the initial results showed the ringgit has stabilised very much,” Muhammad added.

On Dec 2, the central bank had requested companies to convert at least 75 percent of export proceeds into ringgit.

Muhammad also said that Bank Negara may impose new measures to further strengthen the currency.

While not revealing the details of possible measures, he said the central bank will not resort to capital control and ringgit pegging.

The ringgit will remain under pressure next year as volatility and uncertainty in the global financial markets continue to impact capital flows.

When asked about the claim by the World Bank that the ringgit has been among the most affected among the currencies by the development in the US, Muhammad declined to comment.

“You ask the World Bank,” he replied.

“The key point is the ringgit must be stabilised. If ringgit stabilises, then business can make decisions.”

– M’kini

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