KUALA LUMPUR: Malaysia’s central bank will consider introducing more measures to stabilise the ringgit if needed as previous steps to reduce speculation of the currency show progress, Governor Muhammad Ibrahim said.
Bank Negara Malaysia could look at ways to improve liquidity if necessary, Muhammad told reporters in Kuala Lumpur on Friday.
“Only if appropriate, we will introduce new measures,” the governor said. “But these new measures are not capital controls, not fixing of the ringgit, but to stabilise the ringgit. Making sure that people who want the dollar will get the dollar, people who want the ringgit will have access to it. And then to make sure that liquidity is always there in our market.”
The central bank in Malaysia in November stoked fears of a return to capital controls — which were imposed during the 1998 currency crisis and had since been removed — when it clamped down on foreign banks using offshore forwards to bet against the ringgit. Last month, it said it would provide greater hedging flexibility in its onshore currency market and told exporters they should hold at least 75 per cent of export proceeds in ringgit.
The currency has been the hardest hit of Asian emerging markets since Donald Trump’s victory in the US election in November, which spurred bets of more Federal Reserve rate increases. The ringgit has lost 5.3 per cent against the dollar since Nov. 9, and breached 4.5 a dollar on Jan. 4 for the first time since 1998 as investors continued to sell down emerging-market assets.
The central bank’s currency measures will take three to six months to show results though initial outcomes show the ringgit has stabilised “very much,” Muhammad said.
“We should not be fixated on any particular level,” Muhammad said. “It’s very important for the ringgit, once we realigned between the demand and the supply, for it to be dictated by actual demand and supply for the currency. That’s where the ringgit will stabilise, and it will find its natural level as we realign the demand and supply.”
