THE unity government restored political stability in Malaysia, causing the ringgit to strengthen against the dollar, Deputy Finance Minister Steven Sim told parliament today.

He said investor confidence has also grown.

He said the local currency appreciated on the back of these two factors.

“In relation to the US dollar, the ringgit has strengthened by approximately 3.2% from November 24, 2022 to February 17, 2023,” said the Butkit Mertajam MP.

“It follows market expectations that the US central bank will raise interest rates more steadily to deal with the risk of inflation in the US, which has shown signs of continued recovery. This development has also caused the strengthening of the value of major and regional currencies.”

Sim was replying to Lim Guan Eng (Bagan-PH) who asked for the factors contributing to the ringgit’s growth against the US and Singapore dollars and the Indonesian rupiah and its impact on the economy and inflation.

Sim said the reopening of China borders has also boosted the ringgit’s performance. 

“The news has contributed to better economic growth prospects,” he said. 

On January 25, the ringgit extended its uptrend to end at nearly a nine-month high against the US dollar. On that day, the ringgit climbed to 4.2575/2625 against the greenback.

On Malaysia’s economic performance, Sim said GDP grew by 7% in the fourth quarter of 2022 and 8.7% for the whole year. 

He said that the inflation rate in December moderated to 3.8% compared to 4% in November. 

“The inflation rate for the four quarter of last year also moderated overall to 3.9% compared to 4.5% in the previous quarter.” – February 22, 2023.