No pegging of the ringgit, says Johari

KUALA LUMPUR: The Ministry of Finance yesterday assured investors that Malaysia will not peg the ringgit or impose capital controls despite the recent volatility faced by the ringgit.

Second Finance Minister Datuk Johari Abdul Ghani said further decline of the ringgit was worsened by speculative activities going on offshore.

“This follows Donald Trump’s election as the US President and expectations of high interest rates in the US soon, which have led to investors pulling out their funds from Asia,” he told reporters after the launch of the MIA International Accountants Conference 2016 here yesterday.

Johari also said that Bank Negara Malaysia (BNM) will ensure an orderly foreign exchange market in the country.

“As far as Malaysia is concerned, our fundamentals are solid (given) our Gross Domestic Product growth for the third quarter, economic activities and infrastructure investment,” Johari added.

“We will not go for capital controls or pegging as we are an open economy and we will remain one,” he added.

Commenting on the higher Malaysian Government Securities (MGS) yields, Johari said Malaysia has stable and long-term investors who have confidence in the country’s economy and tend to keep investing in the local MGS.

“They are not like speculators or short-term investors ... that’s what we need to maintain and keep.

“Whoever thinks that it’s time to exit, BNM will facilitate that. There is no capital control, pegging is not an option in our country, and we are an open economy.

“No matter how volatile our economy, we will manage, based on our fundamentals,” he added.

Malaysia’s 10-year MGS yields have risen 28.6 basis points to 3.94% after the US presidential election.

On oil prices declining to below the US$45 (RM194.85) per barrel benchmark used in calculating Budget 2017, Johari said: “We will stick to that (US$45 per barrel benchmark). If we want to do any changes, we’ll have to wait until the first quarter of next year.

“Now is a bit early for us to talk,” he added. – Bernama