KUALA LUMPUR - Zeti Akhtar Aziz, governor of Bank Negara Malaysia (BNM), Malaysia's central bank, said on Thursday that there should not be any overreaction to a devalued Chinese currency.
China's currency Renminbi fell sharply in value on Tuesday following the central bank's decision to improve its central parity system to better reflect market development in the exchange rate between the Chinese yuan against the US dollar.
Malaysia's ringgit weakened beyond 4 a dollar for the first time since 1998 Wednesday. Actually, it has dropped about 13 percent against the US dollar this year, making it one of the worst-performing currencies in Asia.
As to this, Zeti said China is adjusting to the international environment, and in practice the Chinese currency has adjusted less than everyone else.
"Taking into account these two recent adjustments; it has adjusted cumulatively since August 2014, when other currencies began adjusting," she said, adding that ringgit has adjusted by about 20 percent since then against the US dollar, while the yuan has just cumulatively adjusted only about 3 or 4 percent.
"So this is not significant, but it surprised the market and therefore the market will adjust to these changes," Zeti said.
"It is good for China, and it is good for the rest of us as well," she added.
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