KUALA LUMPUR: The ringgit should be pegged at RM2.80 to the US dollar in order to create an environment of certainty in the market, said former Prime Minister Tun Dr Mahathir Mohamad.
Dr Mahathir said the peg would also help businesses manage the rising costs of doing business.
“If the exchange rate is fixed at one rate, it will help businesses plan their budgets for the year, knowing exactly that there the value of the ringgit will not change,” he said.
Dr Mahathir said this to reporters after delivering a keynote address at the National Chamber Of Commerce And Industry Of Malaysia’s roundtable, ‘Managing Rising Cost In The Current Business Environment’, here yesterday.
To recap, in 1998, the ringgit was pegged at 3.80 to the US dollar after the local unit substantially depreciated during the 1997 Asian financial crisis.
He said at one time, when the ringgit was fixed at RM3.80 the country had recovered and was able to compete with the neighbours and businesses generally grew.
Dr Mahathir said the current floating system of ringgit only created uncertainty, which could lead to the rising business costs because the businessmen had to hedge against possible inflation.
However, he said, by now the ringgit should be about RM2.80 against the US dollar.
“Should the value of the currency increases, the country will become less competitive. However, if continuous efforts are in place to increase productivity, then that will be all right.
“The cost will go up but we will still remain competitive,” he said.
Earlier in his speech, Dr Mahathir said all parties, including the government, businesses and unions needed to manage the cost of doing business wisely.
“The management should be smart in running the companies, aimed for higher productivity, and look into possibility of investing in better ways of producing thing,” he said. — Bernama