CAP applauds Bank Negara’s decision to relax the foreign exchange administration rules, to enable the ringgit to be used as a currency in international trade.
The decision makes good economic sense. Had the decision been made earlier it could have saved local business millions of ringgit.
CAP had in fact brought up this matter with Bank Negara and the Ministry of Finance in January 2008. (see letters below)
In our letters we pointed out that with the continued weakening of the US dollar, it greatly benefited local companies to quote their exports in ringgit.
We hope that this trend in using the local currency in international trade will spread through out the region, thus reducing the dependency on the US dollar.
(Letter to the Editor, 28 August 2010)
Tan Sri Nor Mohamed Yakcop, Minister of Finance II
and Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz, Governor, Bank Negara Malaysia
on 11 Jan 2008
Against the US dollar, the Ringgit has strengthened by 6.8 % in the last 12 months, from RM3.5300 inn Jan 2, 2007 to RM3.2885 on Jan 3, 2008.
The general consensus is that the dollar will slide further in the months ahead. That being the case, why should our export business continue to be denominated in dollars? Why not use the Malaysian ringgit instead? This is something worth considering.
Kuwait abandoned the dollar peg in May 2007 due to its weak buying power. In November of the same year, the Central Bank in South Korea urged shipbuilders to issue invoices in won. At the Taj Mahal, tourists have to pay for their tickets in rupees as the dollar is no longer accepted. (Asian Bloomberg, 20.12.2007).
We therefore hope that Bank Negara will urge local companies to quote their exports in Malaysian Ringgit.