Malaysia believes a change in China's foreign-exchange policy could affect its own fixed-rate currency and is ready to react to "any eventualities", Malaysian Prime Minister Abdullah Ahmad Badawi said. "We have planned for any eventualities. We do not want to be caught by surprise," state news agency Bernama quoted Abdullah as telling a dinner late on Thursday night. Speculation about an imminent change to China's currency policy reached fever pitch last month after Chinese central bank chief Zhou Xiaochuan said there were no serious political or technical obstacles to reforming the yuan.
Malaysia, which competes with China for export markets, has repeatedly vowed to maintain the ringgit's fixed rate of 3.8 to a dollar. It has said the peg provides stability and the currency is only a little undervalued.
Many economists see the ringgit as undervalued, fanning speculation that it will be revalued to avoid a spiralling import bill. The ringgit has been pegged to the dollar since 1998, when the Asian financial crisis played havoc with regional currencies.
This week, the Asian Development Bank urged Malaysia to relax the peg, saying the country's strong economic fundamentals would allow it to adopt a more flexible exchange rate fairly smoothly.
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