Currency depreciation temporary

1 December, 2014
As appeared in The Malaysian Inside

KUALA LUMPUR: Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said the weakening of the regional currencies, including the ringgit, is temporary.

She said the normalisation of monetary policies by advanced economies “has reversed the ship of global liquidity, in other words we are having withdrawals”.

“That is why many currencies are experiencing depreciation,” she said after the launch of Lifting The Barriers reports by the Asean Business Club, here, yesterday.

However, she said, because of the strong underlying fundamentals, “we should see better-performing currencies in our region”.

On the plummeting oil price that is causing havoc in the currency and equity markets, Zeti said the current price is at a favourable level as it will bring down costs to businesses while lessening inflationary pressures.

“It is to the benefit of the consumers as consumer items such as petroleum and food will be cheaper.

“Thus, consumers have more room for discretionary expenditure and consumption demand, which will spur growth. Hence, we can remain on a sustainable path. It is now at a plus level and the region should be able to remain sustainable,” she said.

“We need to observe whether in fact petroleum will drop beyond acceptable levels, as it may have some effects on the government’s fiscal position, investments and petroleum industry investments and others across the board. At the current levels, it is a plus to growth and inflation,” she added.