Prime Minister Najib Razak, asking investors to take advantage of Malaysia's economic recovery, on Tuesday said the government will never again peg the ringgit currency against the US dollar. At a gathering of business leaders and entrepreneurs, Najib also said his government has learned from "lapses of governance"
at state investment fund 1Malaysia Development Berhad (1MDB), which has been the subject of probes in at least six countries. In 1998, during the Asian financial crisis, then-Prime Minister Mahathir Mohamad, now Najib's bitter political rival, pegged the ringgit against the dollar. The peg was maintained until 2005.
Najib said the pegging resulted in a loss of confidence among global investors. "We have made it very clear that we would never repeat the measure (pegging ringgit to the dollar), trusting that while there may be short term fluctuations, in the longer term the level of the ringgit would reflect the strength of the Malaysian economy," Najib told the conference in Kuala Lumpur.
The ringgit, which was battered in some recent years, strengthened more than 10 percent against the dollar in 2017. In July-September, the economy had annual growth of 6.2 percent, the fastest pace in more than three years. Najib said the government will focus on lowering the fiscal deficit and keeping government debt in check.
It is "essential" to keep government debt below the self-imposed level of 55 percent of gross domestic product and to ensure that sovereign credit ratings "remain within the A band," Najib said.