Communications Minister Fahmi Fadzil has stated that the suggestions to raise the Overnight Policy Rate (OPR) to help strengthen the ringgit is not a good idea, due to the effects it can have on Malaysians.
He said that he is aware of comments made by the people, but he is not sure if there are parties who want the OPR to be increased.
Suggestions for Bank Negara Malaysia (BNM) to increase the OPR has been making its rounds on social media, as it is seen to be a measure that can help strengthen the ringgit, and stop its slide.
According to a report from Bernama, Fahmi Fadzil, who is also the spokesperson for the Unity Government, stated at a post-Cabinet meeting press conference that the Prime Minister, Datuk Seri Anwar Ibrahim is concerned regarding the ringgit’s continuous fall, but he himself doesn’t think that raising the OPR is a good idea.
However, he does concur that in the end, it’s a decision to be made by BNM.
Cabinet did not discuss ringgit’s performance
When asked by reporters if the Cabinet meeting discussed the ringgit’s performance, he said no.
This is due to the fact that the BNM’s governor Datuk Abdul Rasheed Gaffour and Finance Minister II Datuk Seri Amir Hamzah has already provided a succinct explanation regarding ringgit’s performance.
In his statement, Rasheed stated that although it might look like the ringgit is in a bad place now, it doesn’t reflect the positive outlook of Malaysia’s economy, which is fueled by an increase in foreign investments.
He also stated that the ringgit’s bad performance is impacted by external factors, much like other regional currencies.
Analysts agree there is no need to raise the OPR
Previously, analysts have also stated that there is no need to raise the OPR, even though ringgit’s performance has deteriorated significantly compared to its regional peers.
Bank Muamalat Malaysia’s chief economist, Dr Mohd Afzanizam Abdul Rashid, stated that there is no guarantee that raising the OPR will strengthen the ringgit.
Meanwhile, lecturer at Tun Abdul Razak University’s Graduate School of Business Studies Professor Emeritus Dr Barjoyai Bardai stated that the reason other regional currencies are not seeing a deterioration as bad as the ringgit is likely due to the fact that Malaysia’s reserve of US dollars are smaller compared to its neighbouring countries.
