SHAH ALAM, 4 AUG: It is time Bank Negara Malaysia (BNM) intervenes in the foreign exchange market to stabilise the value of the ringgit to a level deemed reasonable, said the former BNM director, Dr Rosli Yaakob.
Dr Rosli said BNM could buy the ringgit using BNM reserves comprising of gold reserves, US dollar reserves and other foreign reserves.
“The way to stabilise the value of the ringgit is for BNM to intervene in foreign exchange to buy and sell the ringgit and in this case, buy a lot of ringgit so that its value can be increased and finally stabilised to a reasonable target.
“However, there are limits in using reserves to stabilise the ringgit because we cannot overuse reserves purely for stabilising the ringgit,” said Dr Rosli to Selangor Kini.
Dr Rosli explained that although this measure will stimulate foreign exchange traders to buy the ringgit, there is the risk of failure as well as losing the invested r but still have the risk of failure as well as causing losses to the use of reserves invested.
He said efforts to stabilise the ringgit is important to reduce exchange rate losses in the country’s imports and exports.
“Investor confidence is also maintained whilst avoiding dilution of their shareholdings in the Stock Exchange and carrying cash abroad,” he said.
Dr Rosli also said that if the depreciation of the ringgit gets out of control, BNM should implement foreign exchange control policies with capital controls and so on. Finally, BNM should re-peg the ringgit at a reasonable rate.
However, the re-pegging of the ringgit should only be done with the exchange of major currencies such as the US Dollar.
NS
