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AWSJ: Fixed Currency Hurt Competition - AMCAM
By Tara Patel
12/4/2001 2:27 am Thu
[American Malaysian Chamber of Commerce (AMCAM) turut melahirkan
kebimbangan Malaysia akan terjejas teruk jika tidak bersedia melakukan
sesuatu kepada nilai ringgit. Walaupun begitu AMCAM tidak menyarankan
Malaysia tergesa menilainya - sebaliknya hendaklah mula memikirkannya
dengan serius agar ekspot dan pelaburan luar tidak tergugat. AMCAM
merangkumi 500 syarikat Amerika di negara ini.
Sudah ramai pelabur angkat kaki dan mula risau. Rezab asing merosot
agak tinggi baru-baru ini telah menyebabkan ramai musykil ringgit
mungkin dinilai kembali. Jika tidak, ringgit akan terus tertekan
dan sesiapa pun tidak mahu menukar wang. Bank Negara cuba memberi
penjelasan tetapi rasa bimbang itu masih belum hilang. Mampukah
ringgit bertahan dengan memesatkan perlancungan? Jawapan yang terpapar
di litar Sepang dan kelengangan KLIA sudahpun memberi jawapan.
American Malaysian Group Says
By TARA PATEL
Dow Jones Newswires
KUALA LUMPUR, Malaysia -- The country should move toward floating the
ringgit to make the country more competitive, the head of the American
Malaysian Chamber of Commerce said Tuesday.
"A fixed peg creates dislocations in the long run. It's hard to
maintain due to changes in fundamentals and changes in the currencies
of neighboring countries," Nicholas Zefferys, president of the
industry organization, told Dow Jones Newswires in a telephone
While he said there is no urgency for Malaysia to alter its currency
regime, the authorities need to begin preparing the private sector for
"Our companies are by and large okay with the peg now, but we have
been telling various ministerial dialogues that there needs to be
discussions on what should follow the peg. Eventually there will be
changes and the question is what will it change to," he said.
Malaysia pegged the ringgit at 3.80 to the dollar in September 1998
when Malaysia imposed capital controls to plug capital flight in the
wake of the Asian financial crisis.
Until earlier this year, manufacturers, who were hit hard by the steep
devaluations in Asian currencies during the crisis, generally backed
Malaysia's fixed exchange rate because it made earnings more
predictable. Local business leaders have said they don't want the peg
But now Amcham, which represents about 500 U.S. companies operating in
Malaysia, joins a growing chorus of industry organizations calling for
a change in Malaysia's ringgit policy. Last week, the Penang branch of
the Federation of Malaysian Manufacturers called for a flexible
exchange rate, albeit one that is fixed by the central bank each month
and then allowed to move within a tight band.
No Urgency to Float Ringgit
This echoed a similar call earlier in the week by the Associated
Chinese Chambers of Commerce and Industry of Malaysia for a ringgit
floated within a fixed band to replace the fixed exchange system --
which it called "untenable" in the long term.
"Malaysia has strong fundamentals vis a vis its neighbors and floating
the currency wouldn't be a move towards greater volatility," Mr.
Zefferys said. "It would give (Malaysia) other policy options that
they don't have right now."
Malaysian authorities have gone to great lengths in recent days to
dispel market speculation that the country will have to devalue the
ringgit in response to regional currency weakness.
The Kuala Lumpur Stock Exchange's key Composite Index shed 11.6% last
week mostly on selling by foreign investors eager to get out of the
market before the peg is changed.
Late Monday, Bank Negara Malaysia issued an unusual statement to
explain a drop in reserves and defend the fixed currency policy.
Economists say erosion of the country's reserves is a threat to the
sustainability of the peg. The central bank lashed out at competitive
devaluations and said the ringgit is close to fair value.
Malaysia's central bank said Monday that foreign reserves dropped to
$27.2 billion at the end of March, down from $28.7 billion mid-March.
The reserves have fallen steadily after peaking at $34.5 billion last
Prime Minister Mahathir Mohamad and Finance Minister Daim Zainuddin
last week also said the peg won't be changed.
"It's not urgent to change the peg," Mr. Zefferys said. "Malaysia
shouldn't respond at any given moment to short-term considerations.
The government is right to say it won't react to the moment."
But he noted that the U.S. slowdown has created uncertainty about the
dollar, to which the ringgit is pegged, and this could affect
Malaysia's exports to Japan and Europe.
"Malaysia would be more competitive with a floating currency where the
equilibrium between the inflow and the outflow of money reflects the
fundamentals of the economy," he said.
Write to Tara Patel at Tara.Patel@dowjones.com