RAM: Stronger ringgit sign of a strong economy

Tags: ASEM | Bank Negara Malaysia | Dr Yeah Kim Leng | Malaysian exports | RAM Holdings Bhd | Ringgit | Tan Sri Dr Zeti Akhtar Aziz | US dollar

Written by Chong Jin Hun
Tuesday, 20 October 2009 10:56

KUALA LUMPUR: Malaysian exports are expected to stay competitive despite a stronger ringgit versus a weakening US dollar, as rival Asian exporters’ currencies are also firming against the greenback.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng said the Malaysian economy would still be able to cope even if the ringgit traded firmer at up to 3.3000 versus the US dollar.

“A stronger currency, in fact, is a positive sign of a strong economy,” Yeah told The Edge Financial Daily in an interview on the sidelines of the Asia-Europe Meeting (ASEM) here yesterday. The three-day event ends today.

At the same time, other factors such as rising foreign exchange reserves, capital inflows, and higher interest rates in Malaysia compared to the US had contributed to the strength of the ringgit, according to the economist who predicted the ringgit will trade between 3.3000 and 3.4000 against the US dollar by year-end.

At 5pm yesterday, the ringgit was traded at 3.3752, compared with 3.7280 seen last March, the weakest so far this year.

Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz had earlier said despite the global economic crisis, the country’s foreign currency exchange market was orderly, a reflection of the underlying fundamentals of the economy.

“We are not concerned as the (forex) level will fluctuate from day to day. But what is important is the underlying trend, and what is even more important is the market remains orderly,” Zeti said told reporters on the sidelines of the event.

More recently, speculation that Middle East countries may stop using the greenback for crude oil transactions had added pessimism to the US dollar.

Going forward, the rise of Asia as the engine of growth as the world economy gradually recovers will be closely watched.

In Zeti’s presentation on Asia’s new development strategy, she said as emerging Asian economies evolved into growth centres in the global landscape, the region had to tailor its development strategies according to the new environment.

These include further development and integration of the region’s financial markets against a landscape of closer cooperation among regional countries.

“As these trends become more pronounced, it will not only contribute towards unlocking Asia’s full potential, but it will also contribute towards a more balanced growth in the global economy,” the governor said.


This article appeared in The Edge Financial Daily, October 20, 2009.