Pegging RM? To Peg or Not To Peg.

The Star - 21 Sept 2008

ALOR STAR: Malaysia can withstand the global economic pressure if the ringgit is re-pegged, former prime minister Tun Dr Mahathir Mohamad said.

“Stabilising the exchange rate is among some of the immediate measures the Government could implement to cushion the impact of global economic slowdown,” he said. Malaysia had the capacity to determine the value of the ringgit because it had enough holding of foreign currencies and substantial savings, with the Employees Providence Fund alone having more than RM200bil in its coffers, he said.

“We shouldn’t float the currency. The country would lose money if the currency is vulnerable to external forces,” Dr Mahathir said at a press conference after presenting a keynote address at a national-level seminar on Development of Higher Learning Institutes.

He was asked on what advice he had for newly-appointed Finance Minister Datuk Seri Najib Tun Razak to cushion the impact of any economic slowdown in developed countries such as the United States on Malaysia.

Warm welcome: Students greeting Dr Mahathir when he arrived to deliver a keynote address at the seminar in Alor Star yesterday.

He said if Malaysia could strengthen the value of the ringgit by 10% (by pegging the ringgit to the US dollar), the import value should depreciate by 10%.

The impact would be immediately felt by the rakyat, when the price of imported goods is reduced, he said.

Dr Mahathir said when he was in power he had set up a panel about a decade ago to tackle the economic slowdown that affected the country when Asian currencies were attacked by rouge speculators.

He advised the authorities to set up a similar panel comprising professionals, including economists, to help ascertain the root causes of problems, scrutinise all data that have impact on the nation’s economy, and suggest ways to tackle the problems.

My Opinion:

Personally for me, it will at least will keep our(RM)currency to be more steady as it will not float in the FOREX. Anyway its Tun's idea. He did it when he was the Primer Minister and when Malaysia had the economy slowdown in 1994. Whether the current Primer Minister will do it or not it's up to him. Oops my mistake. No more Pak Lah but decision must be made by Najib as they just changed the portfolio last 3 days ago.