Better Management Political Stability Will Help Ringgit More Says Johari

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Former finance minister II Johari Ghani says Malaysia should deal with matters under its control rather than resort to a currency peg.PETALING JAYA: A former finance minister has argued against pegging the ringgit to the US dollar, saying better financial management and political stability would do more to arrest the currency’s decline.
Johari Ghani said currency controls would affect the economy in the long run and erode investor confidence, Berita Harian reported.
He said the ringgit had felt the impact of even the proposal to resort to such measures.
“The ringgit is no longer traded internationally. No one dares hold on to the ringgit to avoid the risk of such currency control measures being implemented,” he was quoted as saying.
The ringgit has declined dramatically against the US dollar since mid-March and closed at 4.371 to the dollar on the foreign exchange market yesterday.
Earlier this month, former prime minister Dr Mahathir Mohamad had proposed a peg at RM3.80 to the dollar, as was done by his government at the height of the Asian financial crisis of the late 1990s.
The central bank and economists have since poured cold water on the idea.
Johari, who was finance minister II from 2016 to 2018, said Malaysia paid dearly for pegging the ringgit and had to bear the long-term consequences.
Should such measures be adopted again, the government would be forced to introduce capital controls to maintain the peg and investors would be barred from moving their capital out of the country, thus eroding investor confidence.
“It isn’t ideal to peg the ringgit due to the long-term negative effects on the country’s economy,” he said.
Johari said it would be better to manage the internal factors that were “within our control”, such as ensuring political stability, economic growth and more efficient fiscal management.
These were measures that Malaysia could take which would imbue confidence in investors, despite external factors such as an increase in US interest rates, the Ukraine-Russia conflict and the lockdown in China, he said. - FMT

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