KUALA LUMPUR – The government will leave it to Bank Negara Malaysia (BNM) to decide whether exporting companies should be compelled to convert their export proceeds into ringgit, said Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz.
He said the move, which was done by the central bank at the end of 2016, had its advantages and disadvantages as a form of capital control in controlling the difference in interest rates between the ringgit and foreign currencies.
“If we look at the interest rate differential (between the overnight policy rate at 3% and US Federal Reserve’s funds rate at 5.25%) it is quite large, the US dollar rate is even higher than the ringgit rate.
“This is under BNM’s purview. I leave this (matter) to BNM’s discretion on how to control it,” he said in a press conference after officiating the pre-launch of the International Electric Mobility Showcase 2023 here today.
In December 2016, BNM stipulated that local exporters must convert 75% of the revenue generated from exports into ringgit and only 25% is allowed to be retained in foreign currency.
Tengku Zafrul called for local companies, especially government-linked companies (GLCs), to play a role in supporting the growth of the ringgit and not just leave the responsibility solely to the government.
“This is important, we must show confidence in our currency, especially Malaysian companies and GLCs which are involved in exporting.
“As a trading nation, we are the net exporter. We have current account position, which should be positive for our currency, but we must (also) make sure (that) we remain passionate about supporting our country’s currency as well,” he said.
The ringgit opened higher against the US dollar this morning after weaker US non-farm payrolls data was released.
At 9am, the ringgit appreciated to 4.6555/6600 against the US dollar from 4.6655/6675 at Friday’s close. – Bernama, July 10, 2023
