[UPDATED] BNM says it won’t peg ringgit, set capital controls despite slump

KUALA LUMPUR – Bank Negara Malaysia (BNM) will not be pegging the ringgit or resorting to capital controls while continuing to monitor financial market conditions.

Tan Sri Nor Shamsiah Mohd Yunus said in a statement that the “policy priority is to sustain economic growth in an environment of price stability and to further strengthen domestic economic fundamentals through structural reforms”.

She added that “this will provide a more enduring support for the ringgit”.

The central bank will also ensure orderly financial market conditions amid external developments that have led to persistent strength in the US dollar against almost all currencies, including the ringgit. 

“The US dollar has strengthened significantly due to aggressive monetary policy tightening in the United States. 

“The tighter global financial conditions and higher volatility in the foreign exchange markets are not expected to derail Malaysia’s economic growth,” said the statement.

“BNM’s market operations will ensure sufficient liquidity and orderly functioning of financial markets.” 

Today, the ringgit opened marginally lower against the US dollar due to the lack of buying momentum as demand for the greenback remained strong on the back of its safe-haven status.

On September 14, it was reported that the ringgit slipped further to a fresh 24-year low against the US dollar at the day’s opening.

At 9.05am that day, the local currency slid to 4.5200/5220 against the greenback from 4.5070/5085 at the close the day before.

Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz was also reported as saying that Malaysia was not experiencing an economic crisis just because the ringgit was traded at a low level against the greenback.

He said the ringgit’s performance should be viewed holistically, not just in comparison to the US dollar, as the local note has also strengthened against other currencies. – The Vibes, September 23, 2022