Malaysian premier says peg review doesn't hinge on yuan

Asian Economic News, Nov 24, 2004

KUALA LUMPUR, Nov. 22 Kyodo

Malaysian Prime Minister Abdullah Ahmad Badawi said Monday that whether the country's fixed exchange rate will be reviewed does not depend on the Chinese yuan regime.

''We don't create that kind of linkage,'' the official news agency Bernama quoted him as saying while attending the Asia-Pacific Economic Cooperation forum leaders' summit in Santiago, Chile.

''If we decide to make a decision, we will take it on our own, it doesn't have to be linked to the yuan,'' he said.

The Malaysian ringgit has been pegged at 3.8 to a dollar since Sept. 1, 1998, under then Prime Minister Mahathir Mohamad, in a move to stabilize the currency after a volatile period that followed the Asian financial crisis.

There has been intense speculation in recent weeks that the peg might be lifted, especially after China raised its interest rates last month for the first time in nine years, fueling expectation it would let the yuan float. The yuan is fixed at around 8.3 to the dollar.

Some of China's trading partners have been pressuring it to revalue its yuan as it is seen as undervalued, thus giving Chinese exports an unfair advantage.

Many analysts are also of the view that the ringgit is undervalued, but the Malaysian government maintains that it is at a competitive level.