KUALA LUMPUR, April 23 — The government will monitor the ringgit’s performance in the foreign exchange market following the recent fall in the currency’s value, says Finance Minister Lim Guan Eng.
He said the ringgit’s performance should be evaluated on an annual basis, as it was normal for the value of currencies to fluctuate from day to day.
“The ringgit’s fluctuations are normal. We will have to see its performance over a year. It won’t be very accurate if we do a daily projection. Let’s look at the performance at the end of the year,” he said in an interview with Bernama yesterday.
He said this when asked whether the government would adopt an intervention policy to curb the ringgit’s fall following the recent weakening of the local currency.
Last week, global index provider FTSE Russell said it would review Malaysia’s market accessibility level in its World Government Bond Index (WGBI) due to concerns about market liquidity.
This led to the ringgit’s weakening, as investors were worried about the prospects of the government debt being removed from the index.
Malaysia, currently assigned a “2” (highest level of accessibility) and included in the WGBI since 2004, is being considered for a potential downgrade to “1”, making it ineligible for inclusion in the index.
Maybank Kim Eng said the ringgit had underperformed against the US dollar in April by two per cent in reaction to news that FTSE Russell might drop Malaysia from the WGBI by September.
The news came a week after Norway’s Ministry of Finance proposed to omit emerging government and corporate bonds, including Malaysia’s, from its fixed income benchmark for the Government Pension Fund Global.
Maybank Kim Eng expects the pace of the recent up-move in the US dollar against the ringgit to moderate and possibly retrace below 4.12, as the FTSE review is still ongoing, and with the external environment of green shoots and support for Brent crude price, palm oil price may mitigate the temporary negativity surrounding the ringgit. — Bernama