Brexit effect on ringgit ‘temporary’, international trade minister says

KUALA LUMPUR, June 28 ― The recent slide of Malaysia’s currency as a result of Britain’s exit from the European Union (EU) is only “temporary”, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said today.

He sought to allay anxieties that Malaysia’s economy may be further impacted by events in the UK and the EU, and gave an assurance that the ringgit will bounce back soon.

“The ringgit has been affected by other factors like oil prices. Not just Brexit.

“There is a view that this is temporary. There will be a level which is more realistic. This is only a few days, it is quite normal in the financial market,” Mustapha told a press conference at his ministry  headquarters here.

The Jeli MP said fluctuations to currencies are normal and expected the ringgit to stabilise in the next few weeks.

“What’s happening in Europe probably is a bit worse. This is not unusual.

“What you have seen in the short term is not unusual but in the next few weeks, there will be a lot more stability in the system,” Mustapha or better known by his moniker, Tok Pa said.

He also reiterated that Malaysia is able to cope with any challenge to its economy that could arise as a result of Brexit.

“To say that Malaysia will not be affected at all would be in a state of denial. So we’ve got to be realistic. Being realistic is at the present we do not see any effect yet.

“It is business as usual. Going forward, the Malaysian economy is strong enough to weather some of the challenges we might face,” Mustapha said.

The ringgit opened lower against the US dollar today as uncertainty in the post-Brexit era prompted speculation that regional central banks may cut interest rates, national newswire Bernama reported this morning.

At 9.05am, the ringgit measured 4.1110/1160 against the greenback. The ringgit also stacked up lower against the Singapore dollar at 3.0204/0249 and the Japanese yen at 4.0415/0500 but was stronger against the British pound at 5.4343/4446 and eased against the euro to 4.5295/5371.

After the Brexit results were announced last week, international newswire Bloomberg reported the ringgit is set to drop the lowest since the Asian Financial Crisis in 1998.

The UK was Malaysia’s third largest trading partner in the EU and fourth largest source of investment in 2015.