Malaysia Government to Guarantee All Bank Deposits

From: Pierre
Date: Mon, 19 Oct 2009 23:10:29 -0700 (PDT)
Local: Tues, Oct 20 2009 2:10 pm
Subject: Re: Malaysia Government to Guarantee All Bank Deposits

The Ringgit's been appreciating against the US Dollar lately, but in
the long term it will probably depreciate against currencies such as
the Singapore Dollar, Aussie Dollar and the Euro. But why should the
government guarantee Ringgit value? Bank Negara may take steps to
prevent a freefall in the value of the Ringgit such as capital
controls for instance but such exercises tend to be costly and counter-
productive in the long-run and should only be done sparingly and only
in a real emergency situation such as when currency speculators
devalued the Ringgit in the 1997 Asian economic crises. The main
question rather is how the Malaysian economy will perform in the era
of post-oil Malaysia seeing as how over half of government revenue is
currently derived from oil. If the Malaysian economy is robust, the
Ringgit will not be weak. And vice-versa.

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