(AFP) The government insisted today that it would not alter or abolish its currency peg, saying the ringgit remains competitive despite recent falls in other regional units.

"For the sake of predictability and certainty, the peg will remain. We are confident we will remain competitive even at this rate," Finance Minister Daim Zainuddin told a meeting of fellow Asean finance ministers.

The Malaysian stock market has fallen sharply in the past week on speculation about a revision of the peg, which since September 1998 has fixed the ringgit at 3.80 to the dollar.

Daim's remarks to the closed-door meeting of finance ministers from the 10-member Association of Southeast Asian Nations were relayed to reporters by a finance ministry official.

"At the height of the (1997-98 financial) crisis other currencies depreciated but we did not re-peg," Daim told the meeting.

"When all the other currencies depreciated China did not revalue and they remained competitive."

Peg based on fundamentals

China won praise during the East Asian financial crisis for not devaluing the yuan to make its exports more competitive with those of other Asian nations whose currencies had fallen against the dollar.

"The peg remains based on fundamentals at present," Daim said.

Some analysts have said the weakening of the Japanese yen increases the chances that the ringgit peg will be loosened to make Malaysian exports more competitive.

Malaysian Chinese business leaders have urged the government to move to a system with a fluctuating band for the ringgit. Manufacturers in Penang, the country's Silicon Valley equivalent, have echoed the call.