Malaysia University of Science and Technology economics professor Geoffrey Williams told StarBiz that a ringgit to US dollar peg should not be the government’s policy.
Tengku Zafrul explained that a peg would not be the best move for the economy, as it would require Malaysia to follow the monetary policy of the country to which the ringgit is pegged to. A flexible ringgit exchange rate is important to balance the need to absorb external shocks and support the Malaysian economy, amid global uncertainty, Tengku Zafrul added.
“The ringgit is always driven by market forces even in a pegging regime, because you need to respond to the market value of the US dollar,” he said. Regarding potential measures that the government can take, Williams noted that the central bank does not have deep pockets full of international reserves.
“Financial market players have the means to cope with exchange rate volatility and fluctuations in the level of the ringgit, given that exchange rate changes affect importers and exporters differently.
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