Mahathir sees fair value of ringgit at 3.8: Bloomberg

PHOTO: The Star/Asia News Network

KUALA LUMPUR - Malaysian Prime Minister Mahathir Mohamad sees the fair value of the ringgit currency at 3.8, about 5 per cent stronger than the current value, Bloomberg said on Friday, citing an interview with the premier.

The ringgit MYR= strengthened 0.4 per cent to 3.997 against the US dollar on Friday, buoyed by Mahathir's comments. The announcement that Nor Shamsiah Mohd Yunus, a former deputy central bank governor, had been picked to head Bank Negara Malaysia also helped.

The fair value Mahathir sees is the same rate as the controversial ringgit peg he introduced 20 years ago during the Asian financial crisis.

In 1998, Mahathir pegged the ringgit at 3.8 to the dollar, blaming speculators for attacks on Asian currencies that cast the region in crisis. The peg lasted until 2005, and was widely credited with protecting Malaysia from the worst effects of the Asian crisis.

"We would like to strengthen our ringgit, but it should be done naturally," Mahathir said on Friday, according to Bloomberg.

He also said the ringgit's current valuation was because of the "state of the world's economy, not just ours."

Financial markets have been concerned about Malaysia's economic and fiscal policies since an unexpected win by Mahathir's coalition last month.

The ringgit has gained about 1 per cent this year, following a near 10 per cent jump last year.