A money changer counts Malaysian ringgit banknotes for customers in Kuala Lumpur on Jun 11, 2015. KUALA LUMPUR: Malaysia’s efforts in wooing investors to bring home their returns have succeeded in propping up the ringgit, analysts say, but the path to recovery is littered with questions of if and when the US Federal Reserve cuts rates.The Finance Ministry said in a post on X on Sunday that the ringgit recorded the best performance against the US dollar among 10 regional currencies as of mid-May.
The efforts also include increasing interactions with exporters to convert proceeds into ringgit, monitoring conversions of export and import proceeds, as well as strengthening the domestic economy and continuing promised fiscal reforms. “From a growth perspective, Malaysia continues to register expansion and rising economic activity, accompanied by low and stable inflation,” Bank Negara Malaysia deputy governor Adnan Zaylani said in a speech on May 9.
Recent indications that the Fed could maintain high interest rates for longer or even further increase them if there was a need had caused the ringgit to “weaken a bit” last week, he said. If the US Fed does cut its rates, the ringgit will “leap to another level”, Mr Lee said, although he warned that the situation remains “quite uncertain and volatile”.Flags fly over the US Federal Reserve building on a windy day in Washington DC, US, on May 26, 2017.
“The US rates have been too high for too long. The businesses and consumers in the US are feeling the pinch of higher interest rates,” he said. On May 22, Prime Minister Anwar Ibrahim announced that the government will cut diesel subsidies, which is expected to save around RM4 billion a year. Petrol subsidies are expected to be trimmed next.
Meanwhile, efforts to persuade GLCs and GLICs to bring home investment returns should continue, although this should not be made mandatory to ensure their investment activities are not restricted, the analysts said.
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