Bank Negara today dismissed a claim by the US treasury that Malaysia is manipulating its currency.
In a statement, the central bank said that the country supports free and fair trade and does not engage in unfair currency practices.
This followed the inclusion of Malaysia in a 'monitoring list' in a foreign exchange policy report recently published by the US Department of Treasury Office of International Affairs.
The Edge had earlier reported that besides Malaysia, countries like China, Japan, Korea, Germany, Italy, Ireland, Singapore, and Vietnam also appear on the currency manipulator watch list.
It added that once making the list, a country will remain listed for at least two consecutive foreign exchange policy reports to ensure that any improvement in performance is durable and is not due to temporary factors.
According to Bank Negara, however, inclusion on the monitoring list will have no consequences on the economy.
"The Malaysian economy remains resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance," the statement read.
The bank also explained that Malaysia adopts a floating exchange rate regime.
"The ringgit exchange rate is market-determined and is not relied upon for exports competitiveness.
"As acknowledged by the report, Bank Negara's intervention over the last few years has been in both directions of the foreign exchange market."
It explained that any intervention is limited to ensuring an orderly market, and avoiding excessive volatility of the exchange rate that may affect macroeconomic stability.
"The fact that the ringgit has over the years faced multiple episodes of significant appreciation and depreciation points to the flexibility of the exchange rate."