KUALA LUMPUR: The government will continue to be stringent in ensuring that the ringgit is at a stronger level, said Deputy Minister of Finance Lim Hui Ying (pix).
She said the government will continue to work with Bank Negara Malaysia (BNM) in implementing immediate measures including intensifying engagements with the corporate side.
This includes exporters, importers, government-linked investment companies (GLICs) and government-linked companies (GLCs) to encourage the inflow of funds into the local foreign exchange market.
“Through these measures, a positive impact on the ringgit can be seen. The Financial Markets Committee of BNM on March 1, 2024 stated that there was an immediate impact on market trends and increased market interest in the ringgit.
“The ringgit had increased by 1.3 per cent until March 21, 2024. The performance of the ringgit compared to nine other regional countries has already improved, i.e. in the first position since the coordination measures among the government, BNM, GLCs and GLICs were implemented on Feb 26, 2024,“ she told the Dewan Negara today.
In addition, according to her, market analysts estimate that the ringgit is below its fair value by eight to 10 per cent.
With Malaysia’s economic growth forecast for 2024 expected to be stronger at a range of 4 to 5 per cent, market analysts estimate that the ringgit will improve against the US dollar by the second half of 2024, she noted.
“As an exporting country, the depreciation of the ringgit sustains the income of the export-oriented sector through translation gains in the short term. However, the government is aware that the depreciation of the ringgit will increase the cost of import transactions and reduce household disposable income and savings,“ she said.
Meanwhile, touching on the government’s efforts in retargeting subsidies, Lim said the implementation mechanism for targeted subsidies is still under consideration and is not expected to increase costs for existing industries.
“However, the government still emphasises the implementation and effective communication aspects to industries so that there is no shock to the economy.
“The implementation of this targeted subsidy will be done in stages subject to availability based on a suitable model and feasibility as well as maintaining the government’s focus on ensuring that the cost of living of the people is not affected,“ she added. -Bernama