Malaysia principles out capital controls, foreign money peg as ringgit trades advance 24-yr low

Malaysia principles out capital controls, foreign money peg as ringgit trades advance 24-yr low - Financial Markets Worldwide

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Financial system 8 hours ago (Sep 23, 2022 01: 51AM ET)

Malaysia rules out capital controls, currency peg as ringgit trades near 24-yr low
© Reuters. A fashioned see of the Central Bank of Malaysia (Bank Negara Malaysia) in Kuala Lumpur, Malaysia, July 31, 2019. Characterize taken July 31, 2019. REUTERS/Lim Huey Teng

KUALA LUMPUR (Reuters) – Malaysia is now no longer going to impose capital controls or peg the ringgit to the U.S. dollar, the central bank said on Friday, because the foreign money trades advance a 24-year low.

The ringgit has dropped on the subject of 9% this year, in maintaining with a lag in diverse emerging market currencies, because the U.S. dollar has strengthened.

“Somewhat than resorting to capital controls or re-pegging of the ringgit, the policy precedence now would possibly well perchance be to protect financial scream in an environment of imprint balance and to further toughen home financial fundamentals via structural reforms,” Governor Nor Shamsiah Mohd Yunus said in a commentary.

“This could well perchance present a more enduring toughen for the ringgit,” she added.

The central bank also said it would possibly continue to intently video show and safe particular that easy monetary market conditions amid a stronger dollar.

The ringgit used to be trading at 4.568 to the dollar on Friday. It had fallen to 4.569 on Thursday, its lowest since January, 1998.

In 1998, at some level of the Asian monetary crisis, Malaysia had pegged the ringgit at 3.8 to the U.S. dollar and imposed capital controls. It used to be at final removed in 2005.

This week, Malaysia’s finance minister Tengku Zafrul Aziz also ruled out pegging the ringgit, announcing the kind of switch would be very unhealthy and discontinuance in capital outflows.

Malaysia’s economy is step by step recuperating from impacts of the pandemic, though global dangers are build apart to weigh on future scream.

The economy grew at its fastest annual hotfoot in a year within the second quarter, boosted by expansion in home demand and resilient exports.

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