Government has no plan to peg ringgit

He said the current situation is different from the financial crisis in 1997-1998 when such measure was taken as the country's economic condition now is on a strong footing.

"The current situation is driven by global development that have also affected other countries in the region.

"What is important our economic activities are not affected and a drastic measure like pegging the ringgit is only for extreme situations and we are not embroiled in the quandary," he said when replying to a supplementary question from Datuk Seri Abdul Ghafur Salleh (BN-Kalabakan) at the Dewan Rakyat today.

Chua said Bank Negara Malaysia also has provisions to prevent speculation of the ringgit.

Earlier, he said as depreciation of the ringgit would lead to higher production costs due to rising prices of imported raw materials, the impact would be absorbed by the prices of raw materials which would be lower due to slumping oil and commodity prices.

"Crude oil prices have dropped by 47 percent while food prices decreased by 12 percent since September 2014.

"Hence, the impact on costs for manufacturers is under control. This is reflected from the Producer Price Index that dropped by 3.5 per cent between September 2014 and January 2015," he said.

However, Chua said the impact on the inflation rate is small as imports of goods, excluding petrol and diesel, accounted for 7.2 per cent of the Consumer Price Index (CPI).

He said the economy is still on a strong footing, recording a sustainable growth of six percent in 2014 compared with 4.7 percent in 2013.

The growth resulted from various initiatives taken by the government to diversify the economy and improve its resilience and competitiveness, he added.