Business

Wednesday October 21, 2009

Zeti: Intervention in ringgit market unnecessary


KUALA LUMPUR: The ringgit market remains orderly and there is no need for intervention, according to Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

“We are very pleased that we have orderly conditions in our market and therefore the need does not arise for central bank intervention,” she said at the sidelines of the 21st Federation of Afro-Asian Insurance and Reinsurance (FAIR) conference yesterday.

The ringgit closed higher at 3.3650/3700 against the US dollar from 3.3740/3760 on Monday, snapping a two-day losing streak.

It climbed to 3.343 on Oct 15, its strongest in more than a year.

Tan Sri Dr Zeti Akhtar Aziz striking the gong to launch the conference. Looking on is FAIR organising committee chairman Anuar Mohd Hassan.

Currency dealers said the bank governor’s comment yesterday was “positive” for the ringgit.

Zeti said “only when we have excessive adjustments on any particular day that present risk to the orderly market,” the central bank would intervene.

Asked whether there was a need for another round of stimulus package on top of the current RM67bil one that was in place, she said the economy had already shown signs of recovery. “Unless there is further negative global development, the current stimulus is already producing results.”

She said the current fiscal stimulus was necessary for this year and going into 2010. However, the private sector has to “respond and recover” to ensure sustainable growth over the medium term. Zeti said Bank Negara was “very pleased” that private consumption was expanding and noted that, at the same time, there was “some recovery” in investment activity.

“But this needs to improve further,” she said, adding that the Government’s role was to provide an enabling environment for both domestic and foreign direct investment activities.

Earlier in her keynote address, Zeti said emerging economies, which were expected to lead the global economic recovery, needed to achieve a greater balance between external-oriented development strategies and the strengthening of domestic demand.

On the insurance industry, she said it had progressed significantly over the years. “It is well-positioned to support both the recovery process and future growth potential of the economy.”

She also said public-private partnerships between the government and the insurance industry in providing appropriate insurance schemes were needed to cope with economic losses, caused by natural and man-made catastrophes globally.


For Bank Negara statements click here


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