KUALA LUMPUR: External factors continue to drive the performance of the ringgit and regional currencies, said Deputy Finance Minister I Datuk Seri Ahmad Maslan.
He said one factor driving the ringgit’s performance this year was the expectation that the United States (US) Federal Funds Rate (FFR) would remain higher for longer.
“This happens even in a situation where the US Federal Reserve (Fed) is trying to control inflation at a rate of 3.7 per cent, having raised the FFR to 5.5 per cent. Meanwhile, Malaysia’s overnight policy rate (OPR) stands at 3.0 per cent.
“It is up to Bank Negara Malaysia (BNM) to undertake the next action related to OPR, but our inflation has dropped from 2.0 to 1.9 per cent, so raising the OPR is no longer relevant,“ he said in Dewan Rakyat today.
Ahmad Maslan was replying to a supplementary question from Datuk Muhammad Bakhtiar Wan Chik (PH-Balik Pulau) regarding the measures taken by the government and BNM to curb the fall in the value of the ringgit against the US dollar, besides raising the OPR.
He said other factors affecting the slide in the ringgit value were the weaker-than-expected China’s economic performance and the easing of monetary policy by the People’s Bank of China, causing weak investor sentiment, especially in the Asean region.
“The latest development is the rising concerns about the possible escalation of geopolitical tensions in the Middle East, which has contributed to the strengthening of the US dollar,“ said Ahmad Maslan. – Bernama