The depreciation of the ringgit against the US dollar was 4.4% in the second quarter of this year. It came down to 2.5% in the third quarter and 1.0% in the fourth quarter up to Dec 13, 2018, Deputy Finance Minister Amiruddin Hamzah said when winding up for his ministry at the Dewan Negara today.
“The ringgit’s performance is also becoming more stable when compared with other regional currencies whose value has depreciated between 0.1% and 10.7% compared with the US dollar.
“Countries like Malaysia and Thailand, which have strong economic fundamentals such as current account surplus and low inflation rate, did not experience sudden depreciation in their currencies and showed better performance compared with other currencies.”
However, he said Bank Negara Malaysia (BNM) would make sure the ringgit would be stable via proactive measures to ensure sufficient liquidity and a resilient market.
“In the long term, the ringgit value would be driven particularly by the strength of the country’s economic fundamentals. Hence, Malaysia needs to focus efforts on increasing its economic resilience by diversifying revenue sources and strengthening its fiscal position,” he said.
On how far the government is monitoring the ringgit value following the possibility of the US increasing its interest rate soon, Amiruddin said BNM’s current policy would help Malaysia to withstand times of uncertainty and volatility without affecting the country’s economy.
“This policy, including a flexible ringgit exchange rate, will play an important role as an external shock absorber, without affecting domestic economic activities.”
The government will also ensure the financial markets function in an orderly manner by taking proactive measures to make sure liquidity is sufficient, reduce speculation to avoid significant volatility in the ringgit and use international reserves in accordance with the need to stabilise the market.
In the long term, BNM would continue to review the market development measures to increase the resilience of the domestic money market against any significant volatilities.