KUALA LUMPUR, May 29 (Xinhua) -- Malaysian central bank has said in a statement Wednesday that the country supports free and fair trade, and does not practise unfair currency practices.
The Bank Negara Malaysia (BNM) noted that there are no consequences for the country's economy from its inclusion in the United States Treasury's monitoring list of potential currency manipulator.
"The Malaysian economy remains resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance," BNM said in a statement.
Malaysia has been placed on the currency manipulator watch list by the U.S. Treasury under its report on macroeconomic and foreign exchange policies of major trading partners issued on Tuesday.
"Malaysia adopts a floating exchange rate regime. The ringgit exchange rate is market-determined and is not relied upon for exports competitiveness," it said, adding that BNM intervention over the last few years has been in both directions of the foreign exchange market.
The central bank also noted, any intervention is limited to ensuring an orderly market and avoiding excessive volatility of the exchange rate that may affect macroeconomic stability.
"The fact that the ringgit has over the years faced multiple episodes of significant appreciation and depreciation points to the flexibility of the exchange rate," it said.
BNM also said, the country's current account surplus is a reflection of the diversified nature of the Malaysian economy.
"As a small and highly open economy, Malaysia's current account of the balance of payments is affected by both internal and external developments, including cyclical and structural factors," it said.
The central bank also explained, about half of Malaysia's trade surplus is driven by commodity exports, which is largely influenced by global demand and supply, as opposed to the exchange rate.
Manufactured goods surplus, on the other hand, is partly driven by the long-standing presence of large export-oriented multinational corporations in Malaysia, including from the United States, it added.
