Bank Negara announced this evening that the ringgit peg will be replaced with a managed float effectively immediately. The ringgit exchange rate will now be determined by economic fundamentals and Bank Negara Malaysia will monitor the exchange rate against a currency basket to ensure that the exchange rate remains close to its fair value. Promoting stability of the exchange rate continues to be a primary objective of policy. The move by Malaysia follows China’s decision to re-peg the yuan to the US dollar from 8.28 to 8.11, and ends the ringgit's RM3.80 peg against the US dollar imposed since 1st September 1998. Although I'm hoping for a substantial increase in the ringgit's value, I think at best it could be just RM3.50 per USD.
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