Bank Nigara Malaysia/Bloomberg
Malaysia is among nine countries on the US Treasuary list of potential currency manipulators along with China, Germany, Italy as well as Ireland, Japan, South Korea, Singapore and Vietnam.
Tuesday 11, June 2019 BY MUZORIWA KUDAKWASHE
Bank Negara Malaysia (BNM) said that there are no repercussions to Malaysia’s economy from the country’s inclusion in the US Treasury’s monitoring list of potential currency manipulators, adding that the economy remains resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate as well as strong external balance.
BNM stated that Malaysia supports free and fair trade and does not practise unfair currency practises and it adopts a floating exchange rate regime.
The regulator said that the ringgit exchange rate is market-determined and is not relied upon for exports competitiveness.
The number of countries on the watchlist expanded after US Treasury Secretary Steven Mnuchin lowered the threshold for qualification.
The new threshold includes countries with current-account surplus equivalent to two per cent of GDP, down from three per cent previously.
Additionally, the criteria also include persistent intervention in markets for a nation’s currency and a trade surplus with the US of at least $20 billion. Countries that meet two of the criteria are placed on the watchlist and Malaysia fulfils two out of three criteria listed.
BNM said that as a small and highly open economy Malaysia’s current account of the balance of payments is affected by both internal and external developments, including cyclical and structural factors.