Malaysia won't devalue ringgit

Malaysia won't devalue ringgit

KUALA LUMPUR (Dow Jones): Malaysia won't devalue the ringgit despite rumors to the contrary by currency speculators, Prime Minister Mahathir Mohamad said Saturday according to Bernama news agency.

"It seems that they are waiting for our ringgit to be devalued despite me saying no and the finance minister too has said no," Mahathir was quoted as saying. "We know (speculation) is happening but we do not know who, this time around."

The Malaysian ringgit was pegged at 3.80 to the dollar in September, 1998 when the country imposed capital controls in a bid to stem a sharp economic downturn amid the Asian financial crisis.

During the past month, market talk has centered on whether the government will devalue the ringgit should regional currencies weaken and the country's foreign reserves continue to dwindle.

In a bid to quash the talk, the government and central bank have repeatedly stated the ringgit peg won't be altered.

Mahathir Saturday said the government would not submit to speculative pressure to change the peg, the report said, adding that Malaysian goods remain competitive and the rate of inflation is low.

He said Malaysia's competitiveness also depends on high productivity, political stability and good industrial relations.

Mahathir said unnamed parties had attempted to manipulate the money market by buying dollars at 3.80 ringgit each in the hope that the local currency would be devalued, the report said.

"This is one form of gaining profit. It is an irresponsible act which can damage the country's economy," he said.

The report didn't elaborate further on the market manipulation.