Zeti: No exodus of funds from Malaysia

The ringgit and almost all currencies have weakened against the US dollar.

KUALA LUMPUR: There will not be any exodus of funds from Malaysia, says Bank Negara Malaysia governor Dr Zeti Akhtar Aziz.

Despite the ringgit’s fall, Malaysia’s current account surplus is healthy while foreign direct investments continued to flow into the economy.

Zeti said this phenomenon included fluctuations in the foreign exchange market which was not unique to Malaysia.

Developed financial markets such as Malaysia would be subject to volatile capital flows and Malaysia had experienced all this before, she said.

Speaking on the sidelines after Prime Minister Najib Razak unveiled proactive measures to keep the economy on track, Zeti said Malaysia’s overnight policy rate of 3.25% was highly accommodative and that there was no need to further lower interest rates.

Najib, who is also Finance Minister, announced a number of measures to ensure Malaysia’s growth, development and deficit ambitions remained intact in response to changes in the global economic landscape.

In his special address, the Prime Minister said fluctuations in the ringgit were influenced by developments in the global economy.

He said the ringgit was not the only currency to have weakened against the US dollar but almost all currencies in the region had softened against the greenback since September 2014.

The Governor also said Malaysia’s reserves had declined by about US$19 billion since 2014.

Nonetheless, Zeti said the Goods and Services Tax was a pre-emptive measure that would strengthen Malaysia’s finances and economic fundamentals.

Malaysia will implement the new tax regime on April 1.

– BERNAMA