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KUALA LUMPUR: The business sector should not merely depend on the value of the ringgit to boost its competitiveness, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
Although the government would always ensure that the financial market ran smoothly and in an orderly manner, “the business sector should focus on increasing productivity and innovation, as well as reducing costs,” he said.
The minister responded to a question from Senator Datuk Teo Eng Tee @ Teo Kok Chee (Gerakan) during a Dewan Negara session on measures taken by his ministry to curb the depreciation of the ringgit.
Tengku Zafrul said the value of the ringgit would be mainly driven by the country’s strong economic fundamentals.
Therefore, the government would continue to focus on efforts to improve economic resilience by diversifying the sources of growth and strengthening the competitiveness and fiscal position of the country.
As of September 18, the ringgit had depreciated 0.5 percent against the US dollar this year following uncertain geopolitical development and investor confidence in global financial markets due to major concerns about the COVID-pandemic. 19 and the fall in world oil prices.
The finance minister said that since Malaysia remains a net exporter, the competitive ringgit would generally have advantages.
“Amid a challenging global environment and uncertainties in the world’s financial markets, the flexible ringgit exchange rate plays an important role in cushioning the impacts of the changing external environment so that domestic economic activities are not negatively affected.
“However, the high volatility of the ringgit may increase uncertainty and damage economic activities due to the difficulties faced by players in the commercial and industrial sector in planning their strategy and taking appropriate measures,” he said.
Tengku Zafrul said that the government, through Bank Negara Malaysia (BNM), will always ensure that the financial market is well organized and efficient.
The central bank, he said, also pledged to introduce measures to ensure sufficient liquidity in ringgit, continued market competitiveness and the reduction of speculative activities in the market.
The measures included imposing conditions for a large portion of foreign currency-denominated exports to be converted to the ringgit to increase foreign currency liquidity in the domestic market and increase the enforcement of foreign exchange regulations to curb speculative foreign currency activities , said.
At the same time, BNM had introduced hedging and flexibility instruments so that financial market participants and the corporate sector could implement better risk management in terms of exposure to foreign currency, he added. – Bernama
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