Zeti Akhtar Aziz, Malaysia’s central bank governor, comments on the currency intervention, interest rates and growth. She made these comments to reporters in Kuala Lumpur today during a book launch.
The ringgit has fallen 8.2 percent this year to a three-year low against the dollar, the fourth-worst performer among 11 most-traded Asian currencies tracked by Bloomberg.
On whether the ringgit’s depreciation is a concern:
“What we focus on is orderly financial markets. We don’t focus on any specific level of the exchange rate. That’s why we have liberalized the management of foreign exchange exposures and transactions, so that businesses would be in positions to manage in an environment of this greater volatility.”
On intervention to support the ringgit:
“What is important for us is just to focus on orderly market conditions. If it’s highly disruptive and disorderly, yes, the central bank will step in. Otherwise, it’s very much determined by the market.”
On whether ringgit weakness is adding to inflationary pressure?
“We don’t take this into consideration in managing inflationary conditions.”
On whether the central bank may raise benchmark interest rates:
“The current level of interest rate is supportive of the economy. Domestic demand has been strong. In the first half of this year, domestic demand has expanded by 7.2 percent. Therefore, the current interest rate is supportive of the growth process.”
On options to boost growth:
“Domestic demand and domestic growth has been expanding strongly. If you look at consumption demand, it is growing at 6-7 percent. Private sector investment, which is very, very important for our future growth prospects, has been expanding at double-digit rate. This is important. The policy is to enhance investment climate and to make it easy for investors to operate in our country. These are the kinds of policies that will yield positive results.”
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