The movement in Malaysia’s ringgit currency reflects the country’s economy and its financial system, central bank chief Zeti Akhtar Aziz said on Monday – reported Reuters. The ringgit strengthened on Monday to its highest levels against the dollar in more than nine years – a decisive push through the 3.4 level that had proved a tough chart barrier for more than a week.
Despite obvious influence from the China’s decision to lift interest rates and widen the yuan trading band, Zeti denied the actions by China has anything to do with the strength of Ringgit. “The actions taken in China reflects the circumstances of their economy and financial system and ours reflect our financial system,” she told reporters. “So there is no relationship at this stage.”
Zeti added that she was not concerned about rising oil prices putting upward price pressure on Malaysia’s economy. Asked whether lower inflation rate in March and April gives the central bank the flexibility to cut interest rates, she said, “Interest rate policy is based on the outlook for inflation and the outlook for growth as well, and so we will look at both those trends and make the assessment. But right now we see no change in the outlook.”
She’s one brave lady if it’s true she’s not concern of the strength of the Ringgit. After decades of dependency in the manufacturing, agriculture and energy sector, Malaysia still depends on it to record surplus. Tradings are based on US Dollars and any strength in Ringgit will reduce competitiveness and conversion rate and hence the pride in surplus recorded. While China is the new contender in manufacturing, Malaysia still trying to compete with the Chinese for a piece of cake and not able to climb the higher value-chain technology for long-term survivial. Already there’re talks that the Ringgit will climbs to RM 3 to a USD Dollar. Let’s see if the officials will say the same thing when that happen.
May 21st, 2007 by financetwitter
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Interesting – not that I am holding any Ringgit currency!
Mike.