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Monday, May 16, 2005

Business News : Malaysia should free ringgit -thinktank, ( Breaking News,Kerala news, India News,Us,UK,Kerala Shopping,Onam Special, Kerala Greetings,

Business News : Malaysia should free ringgit -thinktank,Malaysia should free ringgit -thinktank
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Business News, KUALA LUMPUR: Malaysia should move now to unshackle its currency from the U.S. dollar rather than wait for China to revalue the yuan before doing anything, Malaysia's leading economic think-tank said on Monday.

Malaysia's ringgit is fixed at 3.8 to the dollar and, like the yuan, is widely considered to be undervalued, but most economists believe it will not dare to revalue or float the ringgit until China also allows its currency to appreciate.

"It is not advisable for Malaysia to wait for China on the exchange rate policy," Professor Mohamed Ariff, executive director of the Malaysian Institute of Economic Research, said in an essay published in The Star newspaper.

Malaysia competes with China for export markets, especially for electronics goods, and its exporters would suffer a temporary setback if it moved ahead of China and revalued, Mohamed said.

"But there are other considerations calling on Malaysia to 'de-peg' regardless (of China)," he added.

"For one thing the loss of export competitiveness will be temporary and will be tempered by the falling costs of imported components and parts and lower domestic prices."

Malaysia pegged its ringgit to the dollar in 1998 as part of a series of capital controls to shelter the economy from the Asian financial crisis. In the past three years, as the dollar has weakened, it has helped the trade-dependent Southeast Asian economy by making its own exports cheaper.

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