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Malaysia removes capital controls and currency peg as ringgit trades near 24-year low

KUALA LUMPUR (Reuters) – Malaysia will not impose capital controls or peg the ringgit to the U.S. dollar as the currency trades close to 24, the central bank said on Friday. ) yearly minimum.

As the dollar strengthens, the ringgit has fallen nearly 9% this year, in line with losses in other emerging market currencies.

“Rather than resorting to capital controls or re-pegging to the ringgit, the current policy focus is on maintaining economic growth in a price-stabilized environment and further strengthening domestic economic fundamentals through structural reforms, “Governor Nor Shamsiah said in a statement.

“This will provide more lasting support for the ringgit,” she added.

The central bank also said it will continue to closely monitor and ensure orderly financial market conditions amid a stronger dollar.

The exchange rate of the ringgit against the US dollar on Friday was 4.568. It fell to 4. 569 on Thursday, the lowest since January, 569.

In 1998, during the Asian Financial Crisis, Malaysia had pegged the ringgit to the US dollar at 3.8 and imposed capital controls. It was eventually deleted at .

This week, Malaysian Finance Minister Tengku Zafrul Aziz also ruled out the possibility of pegging the ringgit, saying such a move would be risky and the result

Malaysia’s economy is gradually recovering from the impact of the pandemic, although global risks will affect future growth.

The economy grew at its fastest pace in a year in the second quarter, driven by expanding domestic demand and strong exports.

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