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ASEAN
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2001-04-09 22:46:00-04
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Call for Malaysia to give Ringgit a Second Look
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American business group says Malaysia should float ringgit to remain competitive, pressure mounts
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There is need for Malaysia to start thinking about floating the ringgit, according to the head of the American Malaysian Chamber of Commerce. During the heart of the Asian financial crisis, Malaysia established currency controls and pegged its currency, the ringgit, at 3.80 to the dollar in September 1998. That strategy has proved successful, but now those pesky Americans have raised the question of what comes after the peg. Until early this year, Malaysian manufacturers generally backed the peg because it made earnings more predictable. However, Nicholas Zefferys, president of the American Chamber group, which represents about 500 US companies operating in Malaysia has joined an increasing number of industry organizations calling for a change in the ringgit policy. The American voice follows a similar call earlier in the week by the Associated Chinese Chambers of Commerce and Industry of Malaysia for a ringgit floated within a fixed band to replace the fixed exchange system, which it termed 'untenable' in the long run. Recently the Malaysian government has gone to great oratorical lengths to defend its policy of maintaining the fixed peg. However, late on Monday the central bank, Bank Negrara Malaysia, issued an unusual statement to explain a drop in reserves and defend the current fixed peg policy. Zeffrys said, 'Malaysia would be more competitive with a floating currency where the equilibrium between the inflow and the outflow of money reflects the fundamentals of the economy.' Perhaps some of the American firms might consider moving a few miles north to Thailand, where the baht floats.
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