Broader Trade Pacts, Fiscal Reforms Key To Ringgit Stability - Economist

KUALA LUMPUR, Dec 29 (Bernama) -- Malaysia needs to remain open to a broader range of international trade agreements beyond its traditional markets, particularly the United States and China, to support the stability and further strengthening of the ringgit.

Center for Market Education chief executive officer Dr Carmelo Ferlito said the government should continue to push for international free trade agreements as freer trade ultimately benefits the public.

“This is an important factor where Malaysia needs to be even more aggressive, understanding that free trade is beneficial first and foremost for the population,” he said on Bernama World today.

Ferlito agreed that the government was generally on the right track, but believed that more can be done, particularly in rationalising public spending.

While some measures had already been taken on the revenue side, he noted that fiscal discipline would be the key where the government builds its future credibility.

He also said that the recent government reshuffle has played a role in building confidence, with some key positions being filled by individuals viewed positively by the investment community.

At the same time, Ferlito said the need for structural reforms to reduce excessive government intervention in the economy includes recalibrating the role of government-linked companies.

Addressing structural issues such as the fragmentation of small and medium enterprises through reforms that encourage consolidation could help create stronger private sector players, allowing the private sector to play a larger role in driving economic growth, he added.

“So try to recalibrate that and build a bigger space for the private sector.”

On the performance of the ringgit, Ferlito said the Malaysian currency's performance in 2024 and 2025 has been marked by trading volatility, largely driven by external factors and speculative pressures.

He noted that for investors and market observers, stability matters more than the currency’s value as a stable ringgit provides greater certainty for investment planning and economic decision-making.

On Dec 26, the ringgit surged to 4.0410/0495 against the US dollar -- its highest level in nearly five years. The ringgit hit 4.0450/0443 on Feb 26, 2021.

-- BERNAMA