Malaysia central bank chief sees ringgit reprieve as rates peak
THE ringgit is expected to recover along with other emerging-market currencies once central banks in developed economies are done raising interest rates, according to Bank Negara Malaysia governor Abdul Rasheed Ghaffour.
Even as the currency weakens this year, the current interest-rate level in Malaysia is sufficient to support the economy, he said in an interview with Bloomberg Television on Friday (Dec 1). The central bank has held its benchmark at 3 per cent since July.
“We believe the interest rate at 3 per cent is slightly accommodative and it is appropriate for the economy at this point of time,” Abdul Rasheed said.
Policymakers will place greater importance on domestic considerations, including the outlook for inflation and growth in the coming quarters, in deciding on borrowing costs – and are less pressured by the need to attract inflows into the market, he said.
The ringgit strengthened more than 2 per cent in November as signs that the US Federal Reserve is done raising interest rates revived demand for developing-nation assets. The Malaysian currency slumped to almost 4.8 per US dollar in October, the weakest level since since the height of the Asian financial crisis in 1998.
It remains the worst performing currency in emerging Asia this year, having fallen about 6 per cent against the greenback. Even after 125 basis points in rate increases since May 2022, Malaysia’s gauge is at a record discount to the upper bound of the Federal Reserve’s benchmark.