Ringgit's Pre-Election Bounce Is Orderly, Governor Zeti SaysChong Pooi Koon
Zeti Akhtar Aziz, Malaysia’s central bank governor, comments on the ringgit’s 1.9 percent rise against the dollar since Prime Minister Najib Razak dissolved parliament on April 3 for a general election.
She made these remarks to reporters in Kuala Lumpur today ahead of polling on May 5. Malaysia’s economy may expand by as much as 6 percent this year, the central bank forecast in March.
On the ringgit’s bounce:
“This is a global development. Because of the weakening of other currencies our currency has strengthened. We have received inflows. This is not unusual. We have seen all this before.
“What’s more important is our foreign exchange market has been orderly. The financial system -- the banking system in particular and the bond market and capital market in general -- has been able to intermediate these inflows in an orderly manner. This is all very distinctly different from what we saw 10 to 12 years ago, so we are in a much better position to manage this.”
On corporates managing the ringgit’s volatility:
“As a result of the liberalization of the rules for foreign exchange transactions, they have the flexibility to better manage these exposures. They have done well.”
On election campaign spending promises on national debt:
“From what we’ve observed in Europe, the U.S., the U.K. and Japan, fiscal sustainability is very important. This needs to be accompanied by increase in revenue. It needs to be targeted to those areas that have the highest impact. It needs to ensure that all are going to benefit from the fiscal policies.
“In monetary policy, we are keeping the macroeconomic environment in a sound position so that we don’t face inflation.”
On impact of general election on Malaysia’s growth outlook:
“Our economy is very strong and investment is still taking place. These are investments that have already started and they will take place over a few years. This is going to be an important driver of our economy. There is also consumption which is growing steadily. We faced a lot of challenges in the global economy. It’s important for us to stay focused on the economy and keep going.”
On impact of China’s economic slowdown and Japan’s stimulus on Malaysia’s growth target:
“Yes, these are already priced in to our forecast but if it deteriorates further it will affect us. Our growth is on track because what is driving our growth is the domestic demand and that is very critical. Of course, if the global economy slows down significantly, it will affect us as we’ve seen previously, but this time it will not be as bad as previously because of the strength of our domestic demand, in particular because it’s driven by strong growth in investment.”