KUALA LUMPUR, Jan. 23 (Xinhua) -- Malaysian Prime Minister Najib Razak said Tuesday that the country will not repeat measure of pegging its currency to the U.S. dollar, highlighting his confidence in the Malaysian economy as the general election is drawing near.
"We have made it very clear that we would never repeat that measure (pegging the ringgit to U.S. dollar), trusting that while there may be short term fluctuations, in longer term the level of the ringgit would reflect the strength of the Malaysian economy," Najib said when delivering his keynote speech in a conference.
In an effort to protect the Malaysian economy from external vulnerabilities and restore financial stability during the Asian financial crisis in 1997/98, selective exchange controls were imposed by the Malaysian central bank in September 1998. These measures were followed by the fixing of the ringgit exchange rate at 3.80 to the U.S. dollar. The peg was removed in July 2005.
Najib said that the currency pegging was a heavy cost for Malaysia as the investors and global markets lost confidence in Malaysia when the pegging was far too long.
"It took a long time to win that (investors and global markets) back," he said, adding that the move would be an unlimited disaster for Malaysian economy and Malaysian prosperity.
Najib also highlighted that the ringgit appreciated 10.4 percent against the U.S. dollar last year, reflecting positive outlook of the economy.
"The rise may have been partially underpinned by the recovery in crude oil prices, but it also indicates positive sentiment among investors and a recognition of Malaysia's excellent economic and financial fundamentals," he added.
Earlier this month, the ringgit broke the 4.00 psychological level against the U.S. dollar.
