KUALA LUMPUR (BERNAMA) – The move towards de-dollarisation could have positive impacts on the Malaysian economy, said Socio-Economic Research Centre executive director Lee Heng Guie.
He said de-dollarisation would boost the country’s trade relations with trading partners via the use of local currencies in trade settlement.
“Malaysia wants to increase the use of the ringgit with its trading partners as part of a strategy to shore up the ringgit and reduce reliance on the greenback,” he said.
He said this during the Panel Session at the Mini USD/CNH Futures (FCNH) product launch in Kuala Lumpur yesterday.
However, he said the move might negatively influence Malaysia’s overnight policy rate and inflation. Lee said if a very disruptive de-dollarisation occurs, the United States (US) economy would be affected, and in turn, it would have a lot of impact on other countries as well.
“I think there will be a significant impact on capital investors as they lose confidence, and investor sentiment would also be affected due to concerns about de-dollarisation in the global market,” he said.
Prime Minister Datuk Seri Anwar Ibrahim previously said that the use of the local currency in trade was well-received particularly by China and ASEAN countries, namely Indonesia and Thailand.
He said a total of 25 per cent of the total trade with China used the ringgit, amounting to MYR39.2 billion in ringgit and renminbi, from a total of MY157 billion.
Anwar also said that as of August, 16.7 per cent of the total trade with Indonesia used the ringgit and rupiah totalling MYR10.7 billion, while with Thailand, 19.6 per cent of the total trade used ringgit and baht amounting to MYR8.2 billion.
Thus, Lee said these figures would demonstrate that more market participants would like to diversify their assets and investments and prefer to directly use local bilateral currencies to mitigate risks.
