Malaysia won’t use monetary policy as tool to prop up ringgit

[Pelican Press 0]

Malaysia won’t use monetary policy as tool to prop up ringgit

Malaysia will not use monetary policy as a tool to shore up its currency, according to the central bank’s deputy governor.

Bank Negara’s Adnan Zaylani Mohamad Zahid said the country’s policy decisions will be determined by economic growth and the inflation

This is the hidden content, please

• Sign In
• or
• Sign Up

.

“We won’t use interest rates as a tool to somewhat defend the ringgit,” even though interest rate differentials have been “a key driver for much of the performance that we have seen so far,” he told CNBC’s “Squawk Box Asia” on Tuesday.

The ringgit currently does not reflect Malaysia’s economic fundamentals and growth prospects, Bank Negara said in a

This is the hidden content, please

• Sign In
• or
• Sign Up

“External factors, namely shifting expectations of major economies’ monetary policy paths and ongoing geopolitical tensions, have led to heightened volatility in both capital flows and exchange rates across the region, including the ringgit,” it added. 

Like Malaysia, other ****** currencies such as the ********* yen and Korean won have also been battered recently due to the continued strength of the U.S. dollar.

This has been fueled by expectations that the U.S. Federal Reserve could hold interest rates higher-for-longer as inflation ******** sticky.

Adnan Zaylani said the central bank expects the U.S. interest rate cycle to turn at “some point in time,” which will then reflect on the “ringgit performance.”   

The ringgit was last trading at 4.726 to the dollar on Tuesday.

Stabilizing measures

To preserve currency stability, Bank Negara has already taken a number of measures, the deputy governor told CNBC.

“We have continued our market operations — which is providing dollars and providing liquidity to the market as and when it’s needed,” he said.

The central bank has also been working with government-linked companies to repatriate “their foreign income and convert that into ringgit,” which has helped to stabilize the ringgit, Adnan Zaylani said.

“We’re also looking at how we can further bring in flows from corporates that have significant foreign currency balances abroad,” he added.

Malaysia’s central bank maintained its benchmark interest rate

This is the hidden content, please

• Sign In
• or
• Sign Up

, choosing not to follow the recent rate hikes by other Southeast ****** countries

This is the hidden content, please

• Sign In
• or
• Sign Up

.

At the current level, Bank Negara’s monetary policy stance isn’t “tight” and ******** supportive of the economy, said Adnan Zaylani.

Malaysia’s economic growth ******** “quite favorable” but “we do see potential for inflation to rise in this year,” he added.

This is the hidden content, please

• Sign In
• or
• Sign Up

World Markets,Currency markets,Malaysia,Prices,Forex markets,Economic events,US Dollar/Malaysian Ringgit FX Spot Rate,USD/JPY,US Dollar/Korean Won FX Spot Rate,business news
#Malaysia #wont #monetary #policy #tool #prop #ringgit

This is the hidden content, please

• Sign In
• or
• Sign Up