Embattled Prime Minister Najib Razak insisted yesterday that there would be no capital controls or currency pegs to rescue a freefalling ringgit that has lost a quarter of its value against the US dollar in the past year. Instead, he called on corporate players to repatriate liquid assets amid a rapid sell-off of Malaysian equities by foreign investors this year.
The ringgit has dived rapidly in the week since the central bank announced a second-quarter gross domestic product growth of 4.9 per cent - the slowest in two years - and stressed that there would be no controls imposed on money flows. It closed yesterday at 4.14 to the greenback, the lowest in 17 years.
Datuk Seri Najib - who last week acknowledged that political uncertainty has weighed down investor confidence - repeated Bank Negara Malaysia's stance thrice in a statement at a hastily called briefing yesterday for selected local media.
"Although the Malaysian government views that the current levels of the ringgit do not reflect its fundamentals... (it) will not impose capital controls, nor will it implement a peg for the ringgit to the US dollar," he said in his opening statement.
He also said he had come out to affirm the central bank's position as "the market thinks that as head of government, I should make a very strong and unequivocal decision that we will not introduce capital controls and peg the ringgit".
But Mr Najib, who is also Finance Minister, said that Malaysian companies should bring "their liquid assets back from foreign currency to ringgit" as "just based on the exchange rate differential that would be quite a significant surplus".
Financial analysts have largely agreed that the ringgit is oversold, but forecast that it will continue to slide against the US dollar.
"One of the big issues is sentiment - concern of international investors about the political situation in Malaysia," said CIMB banking group chairman Nazir Razak, Mr Najib's brother. He was addressing what he called an "exodus of capital" at an economic summit yesterday.
Government-linked MIDF Equities Research said earlier this month that the cumulative net foreign outflow from Malaysian equities hit RM11.7 billion (S$4 billion) at end- July, far surpassing the RM6.9 billion outflow for the entire 2014.
Mr Najib had sacked key critics, including his then Deputy Premier, in a Cabinet reshuffle on July 28, the same day the Attorney-General - who was heading a task force investigating debt-laden state investor 1Malaysia Development Berhad (1MDB) - was replaced.
While Mr Najib has strengthened his position through these moves, the barrage of criticism over 1MDB and a controversial US$700 million (S$984 million) linked to the fund that was deposited into his personal accounts have deepened anxiety over the Malaysian economy.
With the Najib administration calling plans to call a no-confidence vote against the Premier an "undemocratic" plot to topple him, electoral reforms group Bersih challenged Mr Najib to allow its Aug 29-30 street rally - the fourth such event it has organised - to continue unhindered to test his level of support. "If we are not able to gather many people at Bersih 4, then Najib can say, 'I have allowed Bersih 4 (to gather) and I shall continue to remain in power until the 14th general election,' " Bersih chief Maria Chin Abdullah said on Wednesday.
Former premier Mahathir Mohamad also continued his attacks on Mr Najib yesterday, rebuking the latter's supporters for calling a no-confidence vote undemocratic in a blog post that said the move was both legal and necessary.
Bersih group faces obstacles to its fourth protest - that also demands that Mr Najib step down from office - with Kuala Lumpur City Hall denying the group the use of the iconic Merdeka Square as its venue, leading to city police saying the rally should be called off.
Mr Najib is set to face Umno deputy president Muhyiddin Yassin in the party's Sept 9 supreme council meeting, the first face-off since the latter was sacked as deputy premier.