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Ringgit likely to strengthen before year-end

Publish date: Fri, 01 Mar 2024, 09:49 AM

THE ringgit is currently undervalued up to 10%, says Finance Minister II Datuk Seri Amir Hamzah Azizan.

“If we look at the analysis by bankers, it is likely that the ringgit is undervalued between 8% and 10% compared with the level where it should be at the moment.

“We feel that the ringgit will strengthen and based on analysis by bankers, the ringgit should be at RM4.50 (against the US dollar) before the end of this year,” he said when answering a supplementary question raised by Lim Guan Eng (PH-Bagan) in Dewan Rakyat here yesterday.

Amir Hamzah also said that there was no need to peg the ringgit against the US dollar or impose currency restrictions as what was done during the Asian Financial Crisis (AFC) in 1997/98.

He said this was because Malaysia’s economic fundamentals remain strong with economic growth projected to be between 4% and 4.5% in 2024 unlike during the AFC.

Lim asked how undervalued the ringgit was and when the currency would reflect its fair value. Meanwhile, Amir Hamzah said there was positive indication of rising foreign investor confidence due to the measures taken by the government to strengthen the economy.

“This can be seen from the performance of Bursa Malaysia, which has since seen a rise of 7.2%,” he said.

He reiterated that Bank Negara would also step in to intervene in the foreign currency exchange to keep check on excessive outflow.

“For example, Bank Negara will sell off its US dollar reserves to stem excessive weakness in the ringgit,” he said.

Amir Hamzah said that it is crucial to note that investors will look at the stability of a nation’s economy, currency and policies when deciding to invest in the country.

Amir Hamzah also said that more than 904,000 Employees Provident Fund (EPF) members had voluntarily contributed RM8.4bil in savings as of last year.

He said EPF members who are employed could choose to save more than the required contribution rate of 11% at any time.

“EPF provides various platforms to make it easier for members to contribute to the agency.

“As of Dec 31, 2023, around 210,000 members had registered to contribute more than the statutory rate for employees’ contribution.

“Apart from that, members can voluntarily add their contribution of up to RM100,000 per year,” he told the Dewan Rakyat during the Minister’s question time yesterday (Feb 29).

He was replying to a question by Hassan Abdul Karim (PH-Pasir Gudang) who asked to state the government’s efforts in handling the situation where 35% of EPF members aged 54 have retirement savings of less than RM10,000.

Amir Hamzah added there were various incentives and programmes introduced by the government, including the RM500 one-off contribution incentive, targeting EPF members with low savings and nearing their retirement age.

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