Mahathir Administration Will Protect The Malaysian Ringgit From External Devaluation

Mahathir bin Mohamad
New Malaysian Prime Minister Mahathir Mohamad speaks during a news conference in Kuala Lumpur, Malaysia, May 11, 2018. (Photo: REUTERS/Athit Perawongmetha/File Photo)

Malaysian Prime Minister Tun Dr Mahathir Mohamad said the government will continue to protect the ringgit if it receives attacks from external speculators. He said protecting local currency can curb economic setbacks.

According to The Star, Mahathir answered a student's question if Malaysia will slip into an economic crisis again in the future, stating that the ringgit's value should be fixed to avoid a third crisis. "Malaysia cannot allow the market and ringgit to decline and depreciate further due to attacks by currency speculators," he said.

Mahathir stressed that the government should be careful of speculators trying to devalue the Malaysian currency. He suggested that the ringgit's depreciation can possibly be curbed by focusing on strengthening the local currency despite doubts from the rest of the world.

Aside from helping fix the ringgit's value, Mahathir said locals should patronize local products. The Malay chief said purchasing "foreign products will impoverish the nation." He further explained that local citizens are still largely influenced by the belief that imported products offer higher quality.

On Friday, the Malaysian ringgit saw a rebound against the American dollar at 4.1080/1110. The U.S. dollar, on the other hand, closed at 4.1120/1170 with analysts noting that the bounce back was impacted positively by the revival of Malaysia's East Coast Rail Link (ECRL) project with China.

Dealers commented that the reawakening of the China-Malaysia ECRL deal helped spur optimism among foreign investors who are betting on the Malay economy to improve this year. The revamped deal is now set at RM44 billion, a stark contrast from the previous budget at RM65.5 billion.

Work on the rail network is expected to kick off sometime May if plans go accordingly. It is further expected that the ringgit will continue to rebound this year as the country finds ways to strengthen its currency against western regions.

Meanwhile, tourism stakeholders have expressed support for Mahathir's plans to consider implementing measures that will protect the country's currency from devaluation. They said fixing the local currency could help stabilize the economy.

"We have to estimate and give a buffer on how the ringgit will develop," managing director at Diethelm Travel Malaysia, Mandfred Kurz, said. He added that "pegging the ringgit" for a certain period could help curb currency fluctuations.

For Managing Director of Topaz Travel & Tours, Stephen Thomas, echoed Kurz's sentiments on the Malaysian ringgit. He said preventing the currency from devaluation and imposing measures to protect the currency will play well for outbound economic players, especially in the tourism sector.

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