THE ringgit strengthened 14.6% last year and has been the most stable currency in the region as economic outlook remains strong, said Bank Negara Malaysia governor Muhammad Ibrahim.

In his speech at the Takaful Annual Dinner and Awards 2018 in Kuala Lumpur yesterday, Muhammad said the central bank has always stated that market forces determine the value of the ringgit.

“There has never been a target level for the ringgit exchange rate. With the economy and financial markets constantly evolving, fixation on a particular level of the ringgit exchange rate is counterproductive, if not detrimental to the economy.

“What matters for Bank Negara and all of us here is to ensure that any adjustments taking place are done in a gradual and orderly manner, without causing undue disruptions to businesses and households.”

He said the foreign exchange market can be fickle, therefore, the bank is always on guard.

He said global economic and financial conditions could change rapidly, following numerous developments like the normalisation of interest rates, geopolitical risks and the tendency to adopt policies that might curtail open trade.

“The ringgit’s recent appreciation and stability is not something that the country should take for granted, as what has been learnt in recent years is to never downplay the unexpected.

“The rapid decline in global oil prices, drastic disruptive policy shifts in major economies and the more recent increase in trade tensions are prime examples of tail-risk events that will continue to affect our economy and the ringgit.”

He said the domestic economy showed a strong growth of 5.9% last year, supported by an upswing in global growth and robust domestic demand, which remains central to Malaysia’s growth, grounded on a healthy income and labour market conditions.

“This is not the fruition of just one year’s effort. It is a reflection of the successful structural changes undertaken over the last two decades.

“Malaysia’s shift towards a domestic demand-driven economy and continuous economic diversification have placed us in a very good position to adapt to, and leverage, changes in the global economy.”

He said another transformation that has taken place over the last two years is the increased sophistication of the onshore financial and foreign exchange market.

He said the introduction of Financial Markets Committee measures has established the foundation for a healthier and more vibrant financial and foreign exchange market. – Bernama, March 24, 2018.