New Malaysian Prime Minister supports currency peg
New Malaysian Prime Minister supports currency peg
Agence France-Presse, Kuala Lumpur
Malaysia's new Prime Minister Abdullah Ahmad Badawi, who is also finance minister, on Tuesday backed the pegging of the country's currency to the U.S. dollar, saying it has served the economy well.
Abdullah took over both posts on Oct. 31 from Mahathir Mohamad, who was responsible for pegging the ringgit at 3.8 to the dollar amidst the Asian economic crisis in 1997/98.
"I find that our exchange rate mechanism is very beneficial to our economy," Abdullah told a news conference after paying his first visit to the central bank for a meeting with top officials.
The premier said the peg, which Mahathir defended staunchly against international suggestions that the ringgit be refloated, had not been discussed and he presented an upbeat assessment of the country's economic performance.
"I'm thankful for our economic situation is improving at this moment in time. I hope we will see an even better performance in the near future.
"Our international reserves are currently quite high and well- managed," he said.
The central bank's foreign exchange reserves were 166.9 billion ringgit (US$44 billion) as of Nov. 15, according to official figures.
Azrul Azwar, an economist with MIDF-SISMA Securities agreed with the positive outlook, saying that he had upgraded his economic growth forecast for this year and the next.
Gross Domestic Product (GDP) for 2003 should be 4.8 percent, up from his original estimate of 4.5 percent and 2004 should see 5.0-5.5 percent growth, up from a prediction of 4.9 percent, he said.
The central bank has forecast 4.5 percent GDP growth for 2003 but government officials have said it will likely be higher.
"I think the continued recovery in major industrialized economies like the US and Japan should underpin much of the better performance," Azrul said.
Abdullah also urged Malaysian banks operating in Organization of the Islamic Conference (OIC) countries to start moving into Islamic banking.
"Islamic banking in Malaysia is expanding rapidly and placing Malaysia ahead of other countries," he said.
Malaysia is the current chairman of the 58-member OIC.