Malaysia PM Anwar says ringgit fall concerning but economic fundamentals strong

KUALA LUMPUR - Malaysia’s Prime Minister Anwar Ibrahim said on Feb 23 that

the ringgit’s fall to a 26-year-low

this week was concerning, but emphasised that strong fundamentals underpinned a promising outlook for the economy.

The ringgit is near lows last seen in January 1998, when it reached 4.885 against the US dollar.

“This is concerning, we are looking at it, and luckily it has strengthened a little,” Datuk Seri Anwar, referring to the weak currency, said at a launch event for the Tun Razak Exchange (TRX) financial centre.

However, Mr Anwar told reporters that Malaysia’s growth could be sustained compared with its neighbours as investments were high, and inflation and unemployment were down.

He said the ringgit’s performance now should not be compared with that of 1998, when the nation’s inflation and jobless rates were high and foreign investors had kept away.

As at Feb 23, the currency has slumped 4 per cent against the US dollar in 2024, extending its poor performance in recent years.

Mr Anwar said Malaysia’s RM329.5 billion (S$92.6 billion) in approved investments in 2023, up 23 per cent from 2022, was the highest in the country’s history, and a “reassuring” sign.

The government will continue to monitor the ringgit’s value, but would leave it to the central bank to act, he added.

The central bank on Feb 20 said the ringgit’s recent performance was largely due to external factors and did not reflect the positive prospects of Malaysia’s economy.

Bank Negara Malaysia governor Abdul Rasheed Ghaffour said that given improving exports, a recovery in tourism, an increase in investments and the government’s commitment to structural reform, most analysts were forecasting the ringgit to appreciate in 2024.

Malaysia’s Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said on Feb 22 that trade and investment targets for 2024 can be met despite the ringgit’s fall, as investors would consider the long-term outlook and fundamentals, state media reported.

The country’s gross domestic product grew 3.7 per cent in 2023, data showed last week, below the government’s projection for a 3.8 per cent expansion and a sharp drop from a 22-year high of 8.7 per cent in 2022.

The government and central bank expect economic growth of 4 per cent to 5 per cent in 2024.

Mr Anwar also announced on Feb 23 incentives for companies moving their bases to the newly launched TRX financial centre in Kuala Lumpur.

The incentives include an industrial building allowance, tax exemption on 70 per cent of the statutory income for a period of five years for property developers, and stamp duty exemption on loan and service for a TRX status company.

The TRX is a 28ha development that aims to become Malaysia’s international financial and business centre. REUTERS