BNM: Ringgit strengthened 14.6% last year, but no target fixed

KUALA LUMPUR: The ringgit strengthened 14.6% in 2017 and has been the most stable currency in the region as economic outlook remains strong, said Bank Negara Malaysia (BNM) governor, Tan Sri Muhammad Ibrahim.

In his speech at the Takaful Annual Dinner and Awards 2018 yesterday, he said BNM had always indicated that market forces would determine the value of the ringgit.

“There has never been a target level for the ringgit exchange rate. With the economy and financial markets constantly evolving, fixation on a particular level of the ringgit exchange rate is counterproductive, if not detrimental to the economy.

“What matters for Bank Negara and all of us here is to ensure that any adjustments taking place is done in a gradual and orderly manner, without causing undue disruptions to businesses and households,” he added.

Muhammad said the foreign exchange market can sometimes be very fickle, and therefore, BNM should always remain on guard.

He said the global economic and financial conditions may change rapidly following developments such as normalisation of interest rates, geopolitical risks and the tendency to adopt policies that might curtail open trade.

“The ringgit’s recent appreciation and stability is not something that the country should take for granted as what has been learnt in recent years was to never downplay the unexpected.

“The rapid decline in global oil prices, drastic disruptive policy shifts in major economies, and the more recent increase in trade tensions are prime examples of tail-risk events that will continue to affect our economy and the ringgit,” he added.