Loss of confidence due to 1MDB dragging down ringgit

Loss of confidence due to 1MDB dragging down ringgit – Jomo

A prominent Malaysian economist has countered claims the ringgit’s value is continuing do decline because of external factors such as global oil prices, pointing to a confidence deficit due to the 1MDB scandal.

“What is of concern is that over the last one-and-a-half years or so, the ringgit has been steadily declining.

“This cannot be simply attributed to the collapse in the price of crude oil.

“There are many other factors behind it, including a loss of confidence in the government as more and more revelations are made about 1MDB,” The Edge today reported Jomo Kwame Sundaram saying.

This confidence crisis, he said, is very serious and has huge implications on Malaysia.

The highly respected economist was speaking to reporters at the sidelines of the National Economic Outlook Conference 2017-2018 at Putra World Trade Centre, Kuala Lumpur yesterday.

Yesterday, Reuters reported that the ringgit has slid nearly 5 percent since Nov 9, and the country’s foreign reserves fell by nearly US$2 billion in the last two weeks.

The Star reported the ringgit hit an eight-month low against the US dollar in October, and it is continuing to fall.

Two weeks ago it slid to 4.458 to the US dollar.

During this time, the 1MDB scandal has escalated worldwide, with probes going on in Switzerland and Singapore, among others, and the US launching its civil suits to recover funds it claims had been laundered from 1MDB in their country.

‘S Korea premier good example’

Jomo said the government must face up to the fact that world economies are heading for uncertain times and should be “realistic”.

“We are entering a very different world and especially for a country with an open economy like Malaysia, it is extremely important that we have a realistic understanding of what is going on and the options we have, going forward,” he was reported saying.

When asked for solutions the government can take, the economist pointed to the examples of the resignations of South Korean president Park Geun-hye over a corruption scandal and Italian premier Matteo Renzi as praiseworthy.

“The South Korean president has offered to resign, and that is one way of restoring confidence.

“The prime minister of Italy has also just resigned. These are extraordinary times. We have to think out of the box,” said Jomo.

“What she [Park] has done was very responsible.

“She asked the ruling party and the opposition party to work together to manage the transition process,” the former assistant secretary-general for economic development in the UN was reported saying.

On the other hand, said Jomo, the resignation of Renzi has caused some uncertainty and said should Malaysia follow suit, it should be a bipartisan effort to ensure a smooth power transition.

“[The transition] should be in the interests of the Malaysian people.

“It should not be something just in the interest of the parties – whether it is BN or the opposition parties,” he said according to The Edge.

The government’s claims that the ringgit’s slide is not cause for long term concern is contradicted by the International Monetary Fund’s (IMF) measure of the buffer between foreign reserves and the country’s external debts.

Bloomberg last month reported Malaysia ranks the lowest in this gauge, which means it is vulnerable to market attacks and will have little resources to defend its currency.

Loss of confidence due to 1MDB dragging down ringgit – Jomo
8 Dec 2016 – malaysiakini


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for the triumph of evil
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to do nothing.

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there is LIBERTY.

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