LETTERS: I read with interest a recent NST Leader titled 'The ringgit challenge'. The point mentioned in the editorial to dismiss the prospect of pegging the Malaysian ringgit to the US dollar is cogent.
Perhaps in the current operating environment, more rehash is needed to remind Malaysians of the merits of unorthodox methods to cure the ailing economy.
Rewind back to 1998 — Malaysia was in a precarious situation during the Asian Financial Crisis. Other Asian economies such as Indonesia, which swallowed the bitter pill prescribed by the International Monetary Fund (IMF), fared badly.
The closure of banks, ending of monopolies and removal of subsidies on food and heating oil led to carnage where prices skyrocketed and riots targeted at the Chinese minority who controlled the economy occurred.
Worse, billions of dollars of capital took flight from Indonesia.
Malaysia, on the other hand, thanks to the wisdom and foresight of the then administration, implemented the policy of pegging the ringgit to the US dollar.
When that happened, few gave Malaysia a chance. However, the imposition of capital controls resulted in a "stability anchor" for Malaysia's economy to rebound.
Malaysia assumed absolute control over the flow of finance through the return of the fixed exchange rate to the US dollar and the recalling of the overseas deposits of the ringgit.
Plus, the introduction of new regulations on stock trading to avoid the undesirable effects of short selling and a higher degree of transparency in the dealings of stockbrokers helped lift the ailing Malaysian economy.
And four years later, the IMF conceded the "ringgit peg" is a stability anchor for a rebounding economy.
While there are merits in increasing interest rates, curbing credit and balancing the budget and higher taxes, one should be discerning when assessing the situation at hand.
The same narrative is currently being played after so many years. It is high time to defy the "prophets of doom" and arrest the slide of the ringgit.
IRWAN JAMIL
Singapore
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times
