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Malaysia’s Inclusion in the US Treasury’s Monitoring List of Potential Currency Manipulator

Ref No : 05/19/06 29 May 2019 Embargo : For immediate release    

This is with reference to the inclusion of Malaysia in the “Monitoring List” of the Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US, May 2019 Edition, published by the US Department of Treasury Office of International Affairs.

Malaysia supports free and fair trade, and does not practise unfair currency practices. Malaysia adopts a floating exchange rate regime. The ringgit exchange rate is market-determined and is not relied upon for exports competitiveness. As acknowledged by the report, Bank Negara Malaysia’s (BNM) intervention over the last few years has been in both directions of the foreign exchange market. Any intervention is limited to ensuring an orderly market and avoiding excessive volatility of the exchange rate that may affect macroeconomic stability. The fact that the ringgit has over the years faced multiple episodes of significant appreciation and depreciation points to the flexibility of the exchange rate.

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. About half of Malaysia’s trade surplus is driven by commodity exports, which is largely influenced by global demand and supply, as opposed to the exchange rate. Manufactured goods surplus, on the other hand, is partly driven by the long-standing presence of large export-oriented multinational corporations in Malaysia, including from the US. The current account surplus is thus a reflection of the diversified nature of the Malaysian economy.

There are no consequences for the Malaysian economy from Malaysia’s inclusion in the Monitoring List. The Malaysian economy remains resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance.

Bank Negara Malaysia
29 May 2019

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