Published September 22, 2008

Ringgit peg included in finance minister briefing

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(KUALA LUMPUR) Malaysia's finance minister is to hold talks today on whether to re-peg the ringgit currency, state news agency said yesterday, quoting a top finance ministry official.
Mr Nor: 'Various issues... including the economic situation, finance and the challenges faced in M'sia'

Second Finance Minister Nor Mohamed Yakcop said that Najib Razak, who was appointed finance minister last week, would discuss the issue of the peg after former Prime Minister Mahathir Mohamad called for the exchange rate to be fixed again.

'Various issues would be presented at the briefing including the economic situation, finance and the challenges faced in Malaysia and in the international arena,' he told reporters in Penang, according to state news agency Bernama.

Mr Nor said that the briefing would also discuss whether the ringgit would be re-pegged to cushion the impact of the weakening US dollar against other currencies, Bernama reported.

It was Dr Mahathir who defied the International Monetary Fund in response to the Asian financial crisis of 1997 and 1998 when he imposed capital controls and pegged the currency at 3.80 to the dollar.

The ringgit is currently in a managed float against a basket of currencies and it last traded at 3.459 to the dollar. 'We need to fix the value of the ringgit and I believe the government should do away with managed float because it will result in a loss,' Bernama quoted the former leader as saying.

Dr Mahathir said that a 10 per cent revaluation of the ringgit would help ordinary people by cutting inflation which in July hit a near-27 year high of 8.5 per cent. Dr Mahathir looks set to rejoin the United Malays National Organisation, the main party in Malaysia's coalition government which he led for 22 years, and his call to look at re-pegging the currency was endorsed by International Trade and Industry Minister Muhyiddin Yassin.

Prime Minister Abdullah Ahmad Badawi has faced calls to quit from both Dr Mahathir and Mr Muhyiddin since the ruling coalition scored its worst election result in 50 years of independence and lost its two-thirds majority in parliament in March. 'The uncertain global economy today is due to the sub-prime problems prevailing in the US which resulted in several major banks in the country to go bankrupt and this scenario is different from the situation in 1997,' Mr Muhyiddin said, according to Bernama.

During the Asian crisis, Dr Mahathir lashed out at Jews, currency speculators, the foreign press, international financier George Soros, the IMF and foreigners in general for targeting Asian Muslims for economic destruction. -- Reuters