Prime Minister Datuk Seri Anwar Ibrahim has revealed that the government is actively asking traditional trading partners to accept payment in Malaysian Ringgit, as a move to strengthen the position of the currency.
In the parliamentary session yesterday, Anwar stated that thanks to discussions and negotiations that were held during the Asean Summit held in Jakarta, Indonesia recently.
“We want to increase the use of local currency in trading with China… or de-dollarisation. To stop the reliance on the US dollar is difficult, but Malaysia will be more active and aggressive in the use of the ringgit,” Anwar told parliament.
Anwar was answering a question from an opposition lawmaker, Datuk Awang Hashim on how effective are the government’s measures to deal with the sliding value of ringgit, which now measures at RM4.73 against U.S Dollar.
During the Prime Minister’s Question Time, Anwar explained that so far, Indonesia, Thailand and as aforementioned China has agreed to use local currency in their trades with Malaysia.
“China welcomed the suggestion. Approximately 20 to 28 percent of big-scale investments — billions of ringgit in investments — they are not using dollars but using ringgit. And this does not affect in terms of the losses or depreciation of the ringgit,” said Anwar.
Ringgit slide due to external factors
During his time speaking, Anwar also explained that the Ringgit’s depreciation of value is caused by external factors, such as rising U.S interest rates.
However, he also offered that the ringgit’s depreciation is not as severe as experienced by Japanese Yen or Thailand Baht.
“[South] Korea is more or less the same but Indonesia is better. Indonesia, as emphasised in the last [Parliament] sitting, is more strict in removing subsidies,” he said.
In May, the ringgit reached a six month low, which then prompted a response from Malaysia’s central bank, Bank Negara Malaysia (BNM).
BNM stated that the steep drop of the ringgit value versus U.S dollar is in line with a larger decline experienced by many regional currencies.
Experts have provided some cause for optimism, predicting that the ringgit can hit as high as RM4.30 versus the U.S dollar by year’s end.