Zeti Akhtar Aziz
Bank Negara Malaysia
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WHILE THE MARKET'S attention was focused on China's revaluation of its currency, another Asian country reformed its exchange rate in a less eye-catching but equally successful manner. On July 21, Malaysia followed China's lead and relaxed its fixed-rate regime, which had pegged the ringgit at M$3.8 to the US dollar, setting up in its place a managed floating-rate system. For the central bank, Bank Negara Malaysia, and its governor, Zeti Akhtar Aziz, the transition has proved to be smooth. "The price discovery process has been very orderly," says Zeti in an interview with Euromoney.
The only volatility, she adds, came within a day of the announcement as capital surged into the country on the back of initial excitement. Malaysia's international reserves rose by more than $2 billion within 24 hours of the change. By the following week, however, capital flows had returned to normal levels.
Zeti says that Bank Negara was well prepared to oversee the transition. The trigger was the revaluation of the renminbi – an event that had been expected by the market for several months.