Repegging the ringgit will be unmitigated disaster: PM

Repegging the ringgit will be unmitigated disaster: PM

KUALA LUMPUR: Malaysia will not re-peg the ringgit to the US dollar as the move will be an “unmitigated” disaster for its economy, Datuk Seri Najib Razak said.

The Prime Minister said the ringgit was once pegged against the dollar for far too long, causing investors and global markets to lose confidence in the country.

“It took a long time to win that back. That was a very heavy cost to the country,” he said at Invest Malaysia here today.

“There were some leading the opposition “whom I’m afraid really don’t understand economics. They talk about us re-pegging the ringgit as though that would be an easy and helpful move.

“The reality is that this would be an unmitigated disaster for our economy and therefore for the prosperity of our people,” he added.

Najib made it very clear that the government would never repeat the measure, “trusting that while there may be short term fluctuations, in the longer term the level of the ringgit would reflect the strength of the Malaysian economy.”

Malaysia had in 1998 under then prime minister Tun Dr Mahathir Mohamad pegged the ringgit at 3.8 to one US dollar during the Asian financial crisis. The peg was removed in 2005.

Najib said the ringgit had appreciated by 10.4 per cent against the dollar last year, and on January 5 this year, it had closed at a 17-month high, breaking the four dollar psychological barrier.

“This rise may have been partially underpinned by the recovery in crude oil prices, but it also indicates positive sentiment among investors and a recognition of Malaysia’s excellent economic and financial fundamentals,” he added.