KUALA LUMPUR – The performance of the ringgit is not expected to hinder the country’s economic growth prospects, said Prime Minister Datuk Seri Anwar Ibrahim.
In a statement, Anwar also said the ringgit remains highly resilient in the face of external pressures and global uncertainties, despite a decline in the value of the local currency in recent months.
The Pakatan Harapan chairman said, along with other regional currencies, the ringgit has been influenced by factors such as the anticipation of prolonged high interest rates in the United States and geopolitical dynamics.
However, the prime minister expressed confidence in the ringgit’s ability to withstand these challenges.
“Despite the global headwinds, the ringgit has proven its resilience,” Anwar, who is Tambun MP, said in a statement.
“This steadfastness is a testament to Malaysia’s strong economic fundamentals and prudent policies.”
Anwar’s statement came following a meeting with the National Economic Action Council for the year 2023, which he chaired today.
Earlier today, an analyst said the ringgit opened on a strong note against the US dollar as the US interest rate hike cycle is deemed to be ending for the year, easing risk sentiment.
At 9.05am, the ringgit appreciated to 4.6750/6810 against the greenback from Friday’s close of 4.7265/7320.
Bank Muamalat Malaysia Bhd chief economist and head of social finance Mohd Afzanizam Abdul Rashid told Bernama that the US interest rates are near the cycle peak, partly driven by a weaker than expected Nonfarm Payrolls (NFP) report.
According to Bernama, the ringgit continued its rally for the third consecutive day and jumped out of 25-year lows as weaker US NFP data spurred hopes that a cut in US interest rates would happen earlier than expected.
The NFP, which is the gauge for the total number of jobs created in the US, rose at a slower pace to 150,000 in October, while the unemployment rate crept up to 3.9% after remaining at 3.8% in the past two quarters, dampening sentiment for the greenback.
At 6pm, the ringgit surged to 4.6340/6400 against the greenback from last Friday’s close of 4.7265/7320.
Meanwhile, Anwar said the government’s commitment to structural reforms, notably through initiatives like the New Industrial Master Plan 2030 and the National Energy Transition Roadmap, is instrumental in bolstering Malaysia’s competitiveness and attracting foreign investment.
Anwar reaffirmed the government’s dedication to ensuring stability in the foreign exchange market. He emphasised Bank Negara Malaysia’s commitment to actively prevent excessive volatility and maintain a well-regulated foreign exchange market, thereby instilling confidence among investors and businesses.
During the meeting, the prime minister also addressed key concerns regarding the allocation and expenditure of development funds.
He said the meeting acknowledged the decreasing trend in actual development expenditure relative to budget allocations, even as budgets have seen significant increases. He stressed that addressing this issue is crucial to safeguarding the nation’s long-term economic growth.
Furthermore, the meeting highlighted challenges in the implementation of development projects, including delays and cost overruns, which have negatively impacted economic growth.
“It was also found that the determination of specifications and cost assessments for ICT projects is challenging, and cost review processes are difficult without a standardised cost estimation,” he said.
“This can lead to repeated work duplication and increased costs for ICT projects.”
In this regard, Anwar said the government will take immediate action to improve the processes in the implementation of development expenditure projects, including establishing cross-ministerial teams to review and provide an integrated framework for improvement to be approved by the government. – November 6, 2023