ID :
32304
Tue, 11/25/2008 - 18:26
Auther :
Shortlink :
https://oananews.org//node/32304
The shortlink copeid
LOWER INTEREST RATE WILL NOT HURT RINGGIT
KUALA LUMPUR, Nov 25 (Bernama) - The lower interest rate will not hurt the ringgit, Governor of Bank Negara (Central Bank) Malaysia Dr Zeti Akhtar Aziz said Tuesday.
She said the ringgit (Malaysian currency) has remained relatively stable
against other currencies including regional currencies despite the central
bank's decision Monday to reduce the Overnight Policy Rate.
"If you compare our currency, it has only depreciated mainly against the
US dollar but we do not measure the performance of our currency only against the
US dollar," she said to reporters when asked if the ringgit will depreciate
following Monday's interest rate cut.
"Given that other interest rate are coming down much faster than ours, we
believe that it is not going to be an issue," she said.
Dr Zeti was met after launching HSBC Amanah Malaysia Bhd, the first Islamic
Bank within HSBC Group, here in Petaling Jaya. HSBC Group is one of the world's
largest banking and financial services organisations headquartered in
London.
At 9.00 am Tuesday, the ringgit was traded higher at 3.6180/6220 against
the
greenback compared with Monday's closing of 3.6275/6305.
On how much liquidity will be injected into the system following the
reduction in the OPR by 25 basis points, Dr Zeti said the reduction was not
aimed at really providing more liquidity to the system.
"The system has ample liquidity in the market. It is more to reduce the
cost of intermediation for the banking system," she said.
The central bank, at its Monetary and Policy Committee (MPC) meeting
Monday,
decided to slash the OPR to 3.25 percent from 3.50 percent while the ceiling and
floor rates of the corridor for the OPR were correspondingly reduced to 3.50
percent and 3.00 percent respectively.
Asked whether there would be further cut in interest rate, the governor
said: "Right now, we have assessed the environment. Our interest rate is already
low.supportive of the economic activity and this adjustment is intended to give
further support."
She also added that the situation will be reviewed and an assessment will
be
made of the impact of the measures taken by the crisis-affected countries to see
if they are bearing positive effect.
"If it does, then it will improve condition. Otherwise, we have the
flexibility to take further measures," she said.
When asked on how long the OPR would be retained at the new level, she said
the next MPC meeting would be in January next year, and that Monday's meeting
was the final meeting for this year.
On whether the interest rate cut would be enough to keep the country's
growth projection, Dr Zeti said it was very likely that the growth for the year
as a whole would be at five percent to 5.5 percent.
"We have given the strong growth in the first half of this year. What we
are monitoring very closely is growth in the fourth quarter and
in the first half of next year when probably the full effects of the crisis that
is taking place in the developed countries have an effect on the emerging
economies.
"What has been driving our economy for quite an extended period of
time is domestic demand. That is why we want to see most of the fiscal and the
monetary measures support domestic demand because there is an opportunity to
sustain our economy through promotion of domestic demand during this very
challenging external environment."
The governor said that the export sector has already been affected in the
third quarter.
The country's gross domestic product is projected to grow at 3.5 percent
next year.
-- BERNAMA
She said the ringgit (Malaysian currency) has remained relatively stable
against other currencies including regional currencies despite the central
bank's decision Monday to reduce the Overnight Policy Rate.
"If you compare our currency, it has only depreciated mainly against the
US dollar but we do not measure the performance of our currency only against the
US dollar," she said to reporters when asked if the ringgit will depreciate
following Monday's interest rate cut.
"Given that other interest rate are coming down much faster than ours, we
believe that it is not going to be an issue," she said.
Dr Zeti was met after launching HSBC Amanah Malaysia Bhd, the first Islamic
Bank within HSBC Group, here in Petaling Jaya. HSBC Group is one of the world's
largest banking and financial services organisations headquartered in
London.
At 9.00 am Tuesday, the ringgit was traded higher at 3.6180/6220 against
the
greenback compared with Monday's closing of 3.6275/6305.
On how much liquidity will be injected into the system following the
reduction in the OPR by 25 basis points, Dr Zeti said the reduction was not
aimed at really providing more liquidity to the system.
"The system has ample liquidity in the market. It is more to reduce the
cost of intermediation for the banking system," she said.
The central bank, at its Monetary and Policy Committee (MPC) meeting
Monday,
decided to slash the OPR to 3.25 percent from 3.50 percent while the ceiling and
floor rates of the corridor for the OPR were correspondingly reduced to 3.50
percent and 3.00 percent respectively.
Asked whether there would be further cut in interest rate, the governor
said: "Right now, we have assessed the environment. Our interest rate is already
low.supportive of the economic activity and this adjustment is intended to give
further support."
She also added that the situation will be reviewed and an assessment will
be
made of the impact of the measures taken by the crisis-affected countries to see
if they are bearing positive effect.
"If it does, then it will improve condition. Otherwise, we have the
flexibility to take further measures," she said.
When asked on how long the OPR would be retained at the new level, she said
the next MPC meeting would be in January next year, and that Monday's meeting
was the final meeting for this year.
On whether the interest rate cut would be enough to keep the country's
growth projection, Dr Zeti said it was very likely that the growth for the year
as a whole would be at five percent to 5.5 percent.
"We have given the strong growth in the first half of this year. What we
are monitoring very closely is growth in the fourth quarter and
in the first half of next year when probably the full effects of the crisis that
is taking place in the developed countries have an effect on the emerging
economies.
"What has been driving our economy for quite an extended period of
time is domestic demand. That is why we want to see most of the fiscal and the
monetary measures support domestic demand because there is an opportunity to
sustain our economy through promotion of domestic demand during this very
challenging external environment."
The governor said that the export sector has already been affected in the
third quarter.
The country's gross domestic product is projected to grow at 3.5 percent
next year.
-- BERNAMA
