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Ringgit Rise Reflects M'sian Economy, No Linkage With China's Yuan

KUALA LUMPUR, May 21 - Bank Negara governor Tan Sri Dr Zeti
Akhtar Aziz says the ringgit moves up on its own merit and in line with
the Malaysian economy and not in tandem with the Chinese Yuan.

"The action taken in China reflects the circumstances of their economy and
financial system and ours reflect our financial system," she said when
asked to comment on China's move to set a new parity for the yuan against
the dollar and widening the daily trading band for the currency.

"So, there is no relationship at this stage," she said.

The ringgit today touched a nine-year high at 3.39 against the U.S. dollar
while the yuan ended at a fresh record high of 7.6673 to the dollar.

China's central bank set the yuan central parity rate at a new high of
7.6652 to the dollar earlier this morning while widening the daily trading
band of the yuan currency to 0.5 percent from 0.3 percent.

Asked if the ringgit was too strong, she said: "I never comment on the
level of the ringgit."

To a question if the rising crude oil price was putting a pressure on the
country, Zeti said: "Malaysia has shown the ability to absorb such price
increases and most economies have shown high resilience in absorbing
higher energy prices".

When asked if she expects interest rates to fall, the governor said that
she saw no change in the outlook for interest rates at the moment.

"Interest rate policy is based on the outlook for inflation and the
outlook for growth as well. So we will look at those trends and make
assessment," she said.

On whether the civil service pay rise will affect inflation, Zeti said:
"No. There are many factors mitigating and contributing to the inflation."


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