SIBU: The interest rates imposed by the United States (US) are higher, ranging from 5.25 per cent to 5.5 per cent, compared to Malaysia’s 3 per cent overnight policy rate (OPR), said Senator Pele Peter Tinggom.
“With this significant difference in interest rates, both foreign and local investors seize the opportunity to move their capital out of the domestic market (Malaysia) to markets offering higher returns, such as the US, due to the favourable and higher interest rates.
“This directly puts pressure on the Malaysian ringgit and has become a major reason for the decline in the value of the ringgit compared to the US dollar,” he said in his Facebook post on Sunday (March 17).
He said the US is compelled to raise and maintain interest rates at high levels to curb economic downturns and skyrocketing prices of goods or inflation.
“Inflation in the US stands at 9.1 per cent, whereas in Malaysia, it is half of that at 4.7 per cent,” he stressed.
He added that Malaysia’s economy and the stability of the ringgit are expected to be in a favourable position and continue to progress in the coming years.
“This can be ensured with the Madani economy and its implementation, as well as the existing economic indicators (except for misleading Google data) as explained by the Second Finance Minister Datuk Seri Amir Hamzah Azizan and the Governor of Bank Negara Malaysia Datuk Shaik Abdul Rasheed Abdul Ghaffour,” he said.
Pele emphasised that regardless of differing political ideologies, Malaysians should provide a clear and accurate narrative based on facts so that both foreign and local investors have confidence in Malaysia’s economy.
Meanwhile, Amir when winding up the debate on the motion of thanks on the Royal Address in the Dewan Rakyat on March 11 said the lower OPR increase by Malaysia compared to the Philippines, Indonesia, Korea and India is one of the main reasons for the ringgit’s decline.
He said that while Malaysia’s OPR remained at 3 per cent after it was increased by 125 basis points, the Philippines, Indonesia, Korea and India increased their key policy rates by 200 to 450 basis points, much higher than Malaysia.
“The main goal of the Bank Negara Malaysia’s Monetary Policy Committee in determining the OPR rate is to stabilise prices and ensure sustainable economic growth, and not to control the ringgit exchange rate.
“If the OPR is increased to strengthen the ringgit, the national economy will be affected and various parties, especially borrowers, will have to pay higher interest,” he said
