Malaysia won't peg Ringgit, impose capital controls: Najib

The government will not impose capital controls or implement a peg for the ringgit to the greenback, said Prime Minister Datuk Seri Najib Razak.

Although the government views the current level of the ringgit as not reflecting its fundamentals, the government is cognisant of the integration of the Malaysian and global economies, he said.

Najib, who is also Finance Minister, said Malaysia has become more integrated in the global financial market given the openness of its trade and financial market.

The adjustments facing the global economy and financial markets would have implications on the domestic financial market and exchange rate, he said.

"The flexibility of our exchange rate is thus important to absorb these global adjustments and volatility.

"Therefore, the government of Malaysia will not move to a pegged exchange rate regime nor will it impose capital controls," he said at a press conference here today.

At 9.30 am today, the ringgit was quoted at 4.0980/1030 against 4.1040/1090 at 5 pm on Wednesday.

On whether the ringgit would be able to bounce back, Najib said: "It all depends on the external factors. People want to see what we are going to do in the short term and there will be a reaction to that."

During an engagement session with economists and analysts yesterday, he said they believed the ringgit should be higher than its current level against the US dollar based on the country's economic fundamentals.

He encouraged companies to use local products and government-linked companies as well as some corporate operating overseas to consider liquidating their assets and bringing them back to the country.

"The tourism industry should also be marketed very strongly to take advantage of the current ringgit," he said.

Asked whether the current ringgit's level is competitive for businesses locally and abroad, Najib said certain sectors would benefit while those which rely heavily on imports such as manufacturing would be 'a bit squeezed'.

"Some businesses or corporations that earn revenue in dollars are very happy, but for those who rely on imports this would be a problem because imports become very expensive," he said.