The central bank deputy chief stated that Malaysia will not rely on interest rates to support the ringgit.

• The central bank's deputy governor stated that Malaysia will not use monetary policy as a tool to strengthen its currency.
• The monetary policy of Bank Negara will be based on the economic growth and inflation outlook, as stated by Adnan Zaylani Mohamad Zahid.
• He stated on CNBC's "Squawk Box Asia" on Tuesday that interest rates would not be used as a tool to defend the ringgit, despite their significance in driving much of the performance seen so far.

The central bank's deputy governor stated that Malaysia will not employ monetary policy to strengthen its currency.

The monetary policy decisions of Bank Negara will be based on economic growth and the inflation outlook, as stated by Adnan Zaylani Mohamad Zahid.

Although interest rate differentials have been a significant factor in the ringgit's performance so far, we will not use them as a defense mechanism.

Bank Negara stated last week that the current economic situation does not accurately represent Malaysia's economic fundamentals and growth prospects.

The shifting expectations of major economies' monetary policy paths and ongoing geopolitical tensions have caused increased volatility in capital flows and exchange rates throughout the region, including the ringgit.

Other Asian currencies, like Malaysia, have also been affected by the recent strength of the U.S. dollar. This is due to anticipations that the U.S. Federal Reserve may maintain higher interest rates for an extended period, as inflation persists.

The U.S. interest rate cycle is expected to turn at "some point in time," according to Adnan Zaylani, which will impact the "ringgit performance."

The ringgit was last trading at 4.726 to the dollar on Tuesday.

Stabilizing measures

The deputy governor of Bank Negara stated that measures have been taken to maintain currency stability, as reported by CNBC.

He stated that our market operations have been ongoing, supplying both funds and liquidity to the market as required.

Adnan Zaylani stated that the central bank has collaborated with government-linked companies to repatriate their foreign earnings and convert them into ringgit, which has contributed to the stability of the ringgit.

He added that they are also considering ways to attract flows from corporations with substantial foreign currency holdings overseas.

Last week, Malaysia's central bank decided not to increase its benchmark interest rate, which is currently set at 3%, unlike other Southeast Asian countries such as Indonesia that have recently raised their rates.

Adnan Zaylani stated that Bank Negara's monetary policy stance is not "tight" and continues to support the economy.

Despite Malaysia's economic growth being "quite favorable," there is a possibility of inflation increasing this year, according to him.