Malaysia rules out capital controls, currency peg as ringgit trades near 24-yr low

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KUALA LUMPUR, Sept. 23 (Reuters) – Malaysia will not impose capital controls or peg the ringgit to the US dollar, the central bank said Friday, as the currency is at its lowest point for nearly 24 years.

The ringgit is down nearly 9% this year, in line with a decline in other emerging market currencies as the US dollar strengthened.

“Rather than resorting to capital controls or re-establishing the ringgit, the policy priority now is to support economic growth in an environment of price stability and to further strengthen domestic economic fundamentals through structural reforms,” said the governor. Nor Shamsiah Mohd Yunus in a statement. pronunciation.

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“This will provide a more sustainable support for the ringgit,” she added.

The central bank also said it will continue to closely monitor and ensure financial market conditions amid a stronger dollar.

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The ringgit traded at 4,568 for the dollar on Friday. It had fallen to 4,569 on Thursday, the lowest level since January 1998.

In 1998, during the Asian financial crisis, Malaysia had pegged the ringgit at 3.8 to the US dollar and imposed capital controls. It was finally removed in 2005.

This week, Malaysian Finance Minister Tengku Zafrul Aziz also ruled out pinning the ringgit as such a move would be very risky and lead to capital outflows.

Malaysia’s economy is gradually recovering from the effects of the pandemic, although global risks will weigh on future growth.

The economy grew at its fastest annual pace in a year in the second quarter, fueled by an expansion in domestic demand and resilient exports. read more

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Reporting by A. Ananthalakshmi; Editing by Martin Petty

Our Standards: The Thomson Reuters Trust Principles.

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