NO RISK OR EVEN MORE RISKS: RAHMAN DAHLAN CLAIMS RM55BIL CHINA LOAN AT FIXED YUAN-RINGGIT RATE – BUT WHAT ABOUT THE DOLLAR?
KUALA LUMPUR— Malaysia will not suffer any adverse currency effects due to the East Coast Railway (ECRL) project as the RM55 billion soft loan provided by China’s Exim Bank is at a fixed rate, Datuk Abdul Rahman Dahlan said today.
The minister in the Prime Minister’s Department said that the soft loan was given in a mix of yuan and ringgit, adding that the exchange rates between both currencies have been fixed for the entire tenure of the loan repayments.
“There will be no exchange rate exposure risks for us as at the point of the first draw-down of the loan, the yuan-ringgit exchange rate for loan repayment purposes will be fixed for the remainder duration of the loan,” he said in a statement clarifying his earlier remarks last night.
“This fixed rate shall also apply for future draw-downs and repayments of the RMB denominated portion of the loan,” he added.
Abdul Rahman helms the government’s Economic Planning Unit, under which the ECRL has been parked.
He was responding to claims by former prime minister Tun Dr Mahathir Mohamad that the soft loan taken from the Chinese bank will leave Malaysia exposed to foreign currency exchange risks.
“This has the effect of denominating all loan repayments in Ringgit terms at a fixed RMB-RM exchange rate which eliminates the risk of exchange rate fluctuation,” he said.
“Therefore, there will still not be any foreign exchange risks for this loan as alleged by Tun Mahathir,” he added.
The ringgit, which has been struggling against major currencies since the fall of global crude oil prices, last week hit a new 12-year low against the greenback following anxieties over the victory of Donald Trump in the US presidential elections.