KUALA LUMPUR – External factors continue to drive the performance of the ringgit and regional currencies, said Deputy Finance Minister Datuk Seri Ahmad Maslan.
He said one factor driving the ringgit’s performance this year was the expectation that the US Federal Funds Rate would remain higher for longer.
“This happens even in a situation where the US Federal Reserve is trying to control inflation at a rate of 3.7%, having raised the Federal Funds Rate to 5.5%. Meanwhile, Malaysia’s overnight policy rate (OPR) stands at 3.0%.
“It is up to Bank Negara Malaysia (BNM) to undertake the next action related to the OPR, but our inflation has dropped from 2.0 to 1.9%, so raising the OPR is no longer relevant,” he said in the Dewan Rakyat today.
Ahmad was replying to a supplementary question from Datuk Muhammad Bakhtiar Wan Chik (Balik Pulau-PH) regarding the measures taken by the government and BNM to curb the ringgit’s fall against the US dollar, besides raising the OPR.
He said other factors affecting the ringgit’s slide were the weaker-than-expected economic performance of China and the easing of monetary policy by the People’s Bank of China, causing weak investor sentiment, especially in the Asean region.
“The latest development is the rising concerns about the possible escalation of geopolitical tensions in the Middle East, which has contributed to the strengthening of the US dollar,” said Ahmad. – October 23, 2023