Malaysia's Ringgit Fall is Concerning But Economic Fundamentals Strong, PM Says

MALAYSIA - KUALA LUMPUR. Malaysia's Prime Minister Anwar Ibrahim on Friday said the ringgit currency's fall to a 26-year-low this week was concerning but emphasised that strong fundamentals underpinned a promising outlook for the economy.

The ringgit is trading near lows last seen in January 1998, when it reached 4.8850 against the dollar.

"This is concerning, we're looking at it and luckily it's strengthened a little," Anwar said, referring to the weak currency, at a launch event for the Tun Razak Exhange (TRX) financial centre.

However, Anwar told reporters that Malaysia's growth could be sustained compared to its neighbours as investments were high and inflation and unemployment were down.

Anwar said the ringgit's current performance should not be compared to 1998, when the nation's inflation and jobless rates were high and foreign investors had kept away.

As at Friday, the currency has slumped 4% against the dollar in 2024, extending its poor performance in recent years.

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Anwar said Malaysia's 329.5 billion ringgit ($68.99 billion) in approved investments in 2023, up 23% from 2022, was the highest in the country's history and a "reassuring" sign.

The government will continue to monitor the ringgit's value but would leave it to the central bank to act, the prime minister added.

The central bank on Tuesday said the ringgit's recent performance was largely due to external factors and did not reflect the positive prospects of Malaysia's economy.

Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour said given improving exports, a recovery in tourism, an increase in investments, and the government's commitment to structural reform, most analysts were forecasting the ringgit to appreciate this year.

Malaysia's trade minister on Thursday said its trade and investment targets for 2024 can be met despite the currency's fall, as investors also would consider the long-term outlook and fundamentals, state media reported.

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The Southeast Asian country's gross domestic product grew 3.7% in 2023, data showed last week, below the government's projection for a 3.8% expansion and a sharp drop from a 22-year high of 8.7% in 2022.

The government and central bank expect economic growth of 4% to 5% in 2024.

Anwar on Friday also announced incentives for companies moving their bases to Malaysia's newly launched international financial centre, Tun Razak Exchange (TRX), in capital Kuala Lumpur.

The incentives include an industrial building allowance, tax exemption on 70% of the statutory income for a period of five years for property developers, and stamp duty exemption on loan and service for a TRX status company.

TRX is a 70-acre development that aims to become Malaysia's international financial and business centre.