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Economist warns against politicising ringgit as PH attacks backfire amid currency slump

Statements linking the low ringgit value to administrative weaknesses come back to haunt Pakatan Harapan leaders as they struggle with the latest slide.

Ahmad Mustakim Zulkifli
2 minute read
A money changer counts bank notes while customers wait at a foreign exchange booth in downtown Kuala Lumpur. Photo: AFP
A money changer counts bank notes while customers wait at a foreign exchange booth in downtown Kuala Lumpur. Photo: AFP

An economist has cautioned against using the exchange rate as campaign fodder amid the ringgit's ongoing slump against the US dollar, a headache for the government of Prime Minister Anwar Ibrahim who, during his time in the opposition, cited similar circumstances as proof of administrative weaknesses. 

Speaking to MalaysiaNow, Adillah Zafirah said all parties, whether from the government or opposition, should steer clear of politicising the ringgit value. 

"The value of the ringgit is linked to monetary policies under the purview of Bank Negara (BNM), an independent statutory body.

"BNM has a committee and officers who are credible and who have international standards and a clear decision-making process," Adillah, of think tank Iris Institute, added.

The ringgit recently fell to a low of 3.4 against the Singapore dollar and 4.6 against the US dollar. 

In 2022, it hit a low of 4.73 against the US dollar.

In a Facebook post a year ago, Anwar said the ringgit was losing its value as the world had lost confidence in the Malaysian government. 

"We need leadership that must first inspire the confidence of the people before we can dream of inspiring foreign confidence and then investment," he said at the time. 

PKR deputy president Rafizi Ramli meanwhile said in 2017 that the low ringgit value was evidence of weak economic administration on the part of the government, led at the time by Najib Razak.

"The ringgit is very important because the percentage of imported goods used by the people remains high, especially foodstuffs," he said.

The Pandan MP, who was appointed as economy minister in Anwar's government, recently appeared to do an about-turn, saying the ringgit slump was good for the country. 

He said Malaysia's income, especially in the oil sector, could increase due to sales in US dollars.

Adillah said the ringgit value under the current economic system is determined by market forces.  

"There are too many factors involved in the currency market, including the country's political stability related to investment confidence, inflation, the value of the US dollar and global geopolitics," she added.

But she said that public mentality had long been shaped by Malaysia's political culture, giving the example of the goods and services tax where the coalition government was struggling to implement a fair system and increase national income after threatening to abolish the consumption tax. 

"The people become the victims of populists who are willing to compromise national interests," she said. 

"Our leaders must be brave and firm in making decisions that are right, and not just populist sweeteners." 

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