SHAH ALAM - The government must control or tighten the flow of ringgit to prevent speculators from hiding their money overseas.
Universiti Kuala Lumpur economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said it was currently caused due to the prominent online foreign exchange (forex) trade using ringgit and United States (US) dollars.
"When it's blocked, speculators can't trade using ringgit. Currently, in the forex trades they are purchasing ringgit and US dollars, that's the issue.
"If we control it from trades, it will aid in the ringgit's value to be increased and prevent it from being speculative. Currently there are people trading ringgits and keeping it abroad," he told Sinar on Monday.
Leading economist Professor Jomo Kwame Sundaram on Sunday said the fall in the ringgit's value was not caused by the fundamentals of the country's economy, but by 'powerful' speculators and those hiding billions of ringgits of their money abroad.
Aimi added that among other measures to raise the ringgit's value was to not use US dollars in trading activities overseas.
"When we are trading with other nations, we use that nation's currency and our currency. For example, for Indonesia we can refer to the rupiah and compare it with the US dollar. Prevent purchasing with US dollars.
"Even though there's no purchase using the US dollar, but the exchange continues to refer to it. However, this matter is difficult to implement," he said.
Development and Inclusive Development Institution deputy director Associate Professor Dr Mohd Azlan Shah Zaidi said speculators can gain profits from speculative activities successfully done especially when the expectations of the parties were accurate on the exchange rate or interest trend.
He said despite the risks, the returns were high.
"It can't be denied that speculators also play a role in influencing the ringgit exchange rate as what happened in the Asia exchange rate crisis in 1997.
"However, it is difficult to decide how much total or percentage of speculators involved in influencing the exchange rate.
"It was due to the exchange rate movements depending on various factors, this included interest rate differences between nations, market sentiment, political stability, economic achievements, balance of payments including market supply and demand," he said.
Bank Negara Malaysia (BNM) said it would intervene in the foreign exchange market to curb the movement of currencies that was considered excessive in line with the central bank's statutory mandate.
It followed the developments in the financial market that affect the foreign exchange rate of the ringgit.
BNM Assistant Governor Adnan Zaylani Mohamad Zahid said despite ringgit continuing to be influenced by global developments, Malaysia was expected to grow within the range of 4.0 to 5.0 per cent with the structural reforms and fiscal consolidation by the government being factors supporting local currency value.
"Despite the ringgit's value continuing to drop in the market, BNM expected the measures implemented by the government to strengthen the economy will aid in ensuring the ringgit mirrored the nation's basis well," he said in a statement on BNM's website.