SINGAPORE: Mr Abdul Rasheed Ghaffour, the governor of Bank Negara Malaysia (BNM), the country’s central bank, has said that Malaysia’s economy is not in a crisis despite the ringgit recently dropping to its all-time low against the US dollar. Mr Rasheed reasoned that Malaysia has a resilient banking sector and strong fundamentals.
“What I want to highlight is that although we have touched the Asian Financial Crisis level, we are not in a crisis. It is different from what we experienced in the past,” Free Malaysia Today quoted Mr Rasheed as saying on Oct 23 (Monday).
The central bank governor affirmed BNM’s commitment to take all the steps needed to keep a “smooth and controlled adjustment of the ringgit” that would encourage a good business environment and added that BNM has “an array of market measures” at the ready for boosting the ringgit if needed.
Mr Rasheed also talked about how other currencies are faring against the US dollar, saying that “almost all currencies in the world depreciated against the US dollar, especially those in emerging markets, including Malaysia.”
Read related: Malaysian Ringgit Drops to Lowest Level Since 1998 Amidst Rising US Dollar
Nevertheless, many news outlets reported last week that after the Japanese yen, the ringgit has been the worst performer in Asia this year, dropping by more than 8 per cent against the US dollar. Bloomberg noted on Oct 18 that in the past six months through August, Malaysia has consistently posted lower export numbers. This is due, at least in part, to an economic slowdown in China, which is the Southeast Asian country’s biggest trading partner.
September’s data showed that Malaysia’s exports fell by 13.7 per cent, although the decline was slower than the 16.5 per cent expected by 17 economists to whom Reuters spoke. Bloomberg pointed out that the ringgit’s most recent fall has come at the same time that the dollar has gained on haven demand amidst concerns over the war between Israel and Hamas.
However, Mr Rasheed sounded optimistic about the situation taking a turn for the better in the coming months. FMT quotes him as saying, “We have a strong banking system supported by a high level of capitalisation and healthy assets, and they are ready to fund the economy to support economic growth. Our capital sector is also very strong with a capital account surplus.”
He had said that the issues the ringgit has faced are mainly due to global developments, noting that Malaysia has seen strong economic growth, consistent disinflation, account surplus, and resilient banking sector and that the currency fluctuation “certainly does not reflect our economic fundamentals.”
For the third quarter of this year, Malaysia expects a 3.3 per cent increase in the GDP, stronger than last quarter’s 2.9 per cent growth. /TISG