Weakening of the ringgit not a reflection of country's economic fundamentals

The weakening of the ringgit does not reflect the country's current economic fundamentals, says Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.

He said the local banking system is sound, economic activities are still intact to drive economic growth and the country is on track to achieve a Gross Domestic Product growth of between 4.5 per cent and 5.5 per cent this year.

"Back in 1997 and 1998 (during the Asian financial crisis), we were hit very badly," he said, adding that many factors affected Malaysia then, including a trade deficit, reserves falling below US$30 billion and a high gearing level among companies with some exposed to foreign currency borrowings.

"Our current position has improved tremendously, where we have recorded consistent trade surplus, our reserves is more than three times larger now and our corporate debt level is much lower," he told reporters after the GLC Open Day Forum 1 on Friday.

In terms of the banking system, Wahid said banks are now well managed and capitalised with good liquidity and asset quality while the net impaired loan ratio stood at 1.2 per cent.

Banks are also well regulated and supervised by the central bank, he added.

The local currency continued its downtrend, closing lower against the greenback on Friday at 3.9220/9250 from 3.9005/9035 on Thursday.