The four-year-old currency peg of RM3.8 to the dollar has proven to be sustainable and would remain in place, Prime Minister Dr Mahathir Mohamad said today.

"It has sustained until now, September 1998 until now," Mahathir told reporters when asked if the peg was sustainable.

"Nobody is complaining, our economy is doing well, there is no black market in the Malaysian currency, so the pegging was good. Everybody accepts it," said Mahathir, who is also the finance minister.

"Other countries if they do that kind of thing, the probability is that there will be black market, not here."

The ringgit was fixed to the greenback as part of capital controls imposed in 1998 after the economy plunged into a recession. All the curbs apart from the peg have since been lifted.

While the peg has contributed to short-term stability, some economists warned maintaining it could rein in potential economic growth and lead to the inefficient allocation of resources.