Monday, July 25, 2011

Strange Days…

In an rather unusual move by central bank standards, BNM issued a statement on Friday marking the 6th anniversary of the lifting of the USD peg:

Managed float regime continues to support growth

Today marks the sixth year since the shift to the managed float regime for the ringgit exchange rate. In the six years, the global economic and financial landscape experienced exceptional developments - the worst global economic and financial crisis since the Second World War, and extreme volatility in two-way capital flows. The exchange rate regime has accorded the economy with greater flexibility in facing these challenges. As the global economy recovers, the ringgit has strengthened in line with Malaysia's stronger economic fundamentals. The gradual and orderly adjustments of the ringgit have facilitated the corresponding changes to take place in the real economy.

The Central Bank will continue to focus on facilitating orderly market conditions so that international financial transactions can be conducted in an efficient manner. Going forward, the managed float regime and the flexibility it accords will also continue to facilitate the transformation of the economy as we advance towards being a high-income nation.

Central banking is generally a thankless job – if you get things right, nobody notices you. If you get things wrong…

But the tone of the statement suggests an answering to critics, though I don’t know of anybody really hankering after the old days of the fixed rate USD peg. Also, to my recollection, there’s never been a statement to mark past anniversaries. So the fact that BNM saw fit to issue the statement in the first place is really strange.

Unless it’s tacit approval for the Ringgit’s move below RM3.00 to the USD last week. That would fit with the anti-inflation message the Governor was supposed to have sent last week.

Comments welcome, because I have no other idea what’s behind this.

1 comment:

  1. keywords

    Gradual + Orderly....

    Sounds more like a "soft warning"