Malaysian ringgit hits

Kuala Lumpur, May 3 :

The Malaysian ringgit hit an eight-year high against the US dollar Wednesday, but government officials downplayed concerns that it is appreciating too quickly.

The ringgit rose as high as 3.6080 against the US dollar, its highest level since the government replaced an eight-year-old peg with a managed float regime on July 21, 2005, immediately after China cut the link between its currency, the yuan, and the dollar.

Second Finance Minister Nor Mohamed Yakcop said the ringgit’s appreciation was in line with the strength of several other currencies against the dollar.

“Even Singapore is strengthening its currency. Currencies like the euro, sterling and yen are also strengthening. We are in line with the strengthening of currencies against the US dollar,” he was quoted as saying by the New Straits Times. Central bank governor Zeti Akhtar Aziz was quoted by the New Straits Times as saying that the ringgit’s rise has been orderly.

“Non-dollar currencies have strengthened across the board, so this in essence is an expected development,” she said. “The word I use, stability of the currency, means that it’s orderly; that the movement remains orderly, and orderly movement of the currency is important.” The ringgit gained only 0.5 per cent against the US dollar last year, as the central bank intervened to prevent any sharp fluctuations. But this year, the ringgit has accelerated its climb, appreciating by 4.5 per cent against the dollar.

Analysts say a stronger ringgit will help reduce import costs and combat inflation, which soared to a seven-year high of 4.8 per cent in March due to higher food and transport costs following an increase in fuel prices. Some economists predict the ringgit could hit a high of 3.50 against the US dollar by June, raising concerns that it could make exports more expensive and dent the country’s competitiveness.