ID :
21543
Sat, 09/27/2008 - 16:50
Auther :
Shortlink :
http://m.oananews.org//node/21543
The shortlink copeid
LIFTING BAN ON RINGGIT OFFSHORE TRADING WILL MAKE IT MORE RECEPTIVE TO INT'L TRADERS
KUALA LUMPUR, Sept 27 (Bernama) -- Lifting of the offshore Ringgit trading ban will make the currency more receptive to international traders in making the local currency as settlement for trade.
"If the ban is lifted, it will be easier for them to accept the Ringgit as
settlement currency as it is traded internationally," Bank Islam economist,
Azrul Azwar Ahmad Tajudin, said.
He was responding to a question on the proposal by former Prime Minister
Tun Dr Mahathir Mohamad to make all Malaysian trade payments in Ringgit
denomination.
By doing so, the Ringgit will be in constant demand and its value will be
stable at a certain level, Dr Mahathir had said.
As buyers, Azrul said, Malaysia will have the upper hand to dictate whether
the Ringgit can be used for settlement.
"However, we need to be mindful that sellers may shy away if there are too
many hassles," he told Bernama Friday.
"We may explore the idea (but) it is very hard to make it happen because
the Ringgit is not an international currency," he added.
Meanwhile, RAM economist, Dr Yeah Kim Leng, said as long as the exchange
rate was not overly volatile and remained manageable, the benefit of a managed
float would outweigh the fixed rate of the Ringgit.
He said if the Ringgit was not allowed to change with times, it might
become overly undervalued or overvalued, depending on the current global
situation.
"Like in the US where the economy is going down fast, so is its currency.
If we peg the Ringgit at a fixed rate, we will create too much rigidity," he
said.
Yeah said the pegging of a currency should also take into account the
international trading structure where the market is based on selected currencies
or denominations, especially since 80 per cent of goods are traded in US
dollars.
"Our Ringgit is not an international currency. Importers elsewhere will
need quotations in other major currencies that are internationally convertible
in overseas markets," he said.
At 5pm, the Ringgit closed 3.4340/4370 against the greenback compared with
Thursday's close of 3.4290/4310.
Nevertheless, Yeah is optimistic that the Ringgit may regain its strength
in
line with the further weakening of the US dollar.
He said it appeared imminent that the US would undertake a rate cut to
cushion the impact of the ongoing housing market and credit crisis there.
"It is not just the bailout of the financial institutions that can save
them, they may also need to have a rate cut to boost the US economy since the
1930s depression," he added.
"If the ban is lifted, it will be easier for them to accept the Ringgit as
settlement currency as it is traded internationally," Bank Islam economist,
Azrul Azwar Ahmad Tajudin, said.
He was responding to a question on the proposal by former Prime Minister
Tun Dr Mahathir Mohamad to make all Malaysian trade payments in Ringgit
denomination.
By doing so, the Ringgit will be in constant demand and its value will be
stable at a certain level, Dr Mahathir had said.
As buyers, Azrul said, Malaysia will have the upper hand to dictate whether
the Ringgit can be used for settlement.
"However, we need to be mindful that sellers may shy away if there are too
many hassles," he told Bernama Friday.
"We may explore the idea (but) it is very hard to make it happen because
the Ringgit is not an international currency," he added.
Meanwhile, RAM economist, Dr Yeah Kim Leng, said as long as the exchange
rate was not overly volatile and remained manageable, the benefit of a managed
float would outweigh the fixed rate of the Ringgit.
He said if the Ringgit was not allowed to change with times, it might
become overly undervalued or overvalued, depending on the current global
situation.
"Like in the US where the economy is going down fast, so is its currency.
If we peg the Ringgit at a fixed rate, we will create too much rigidity," he
said.
Yeah said the pegging of a currency should also take into account the
international trading structure where the market is based on selected currencies
or denominations, especially since 80 per cent of goods are traded in US
dollars.
"Our Ringgit is not an international currency. Importers elsewhere will
need quotations in other major currencies that are internationally convertible
in overseas markets," he said.
At 5pm, the Ringgit closed 3.4340/4370 against the greenback compared with
Thursday's close of 3.4290/4310.
Nevertheless, Yeah is optimistic that the Ringgit may regain its strength
in
line with the further weakening of the US dollar.
He said it appeared imminent that the US would undertake a rate cut to
cushion the impact of the ongoing housing market and credit crisis there.
"It is not just the bailout of the financial institutions that can save
them, they may also need to have a rate cut to boost the US economy since the
1930s depression," he added.
