KUALA LUMPUR (Dec 11): The move towards de-dollarisation could have positive impacts on the Malaysian economy, said Socio-Economic Research Centre executive director Lee Heng Guie. 

He said de-dollarisation would boost the country’s trade relations with trading partners via the use of local currencies in trade settlement.

“Malaysia wants to increase the use of the ringgit with its trading partners, as part of a strategy to shore up the ringgit and reduce reliance on the greenback,” he said during the panel session at the Mini USD/CNH Futures (FCNH) product launch here on Monday.

However, he said the move might negatively influence Malaysia’s overnight policy rate and inflation.

Lee said if a very disruptive de-dollarisation occurs, the United States (US) economy would be affected, and in turn, it would have a lot of impact on other countries as well.

“I think there will be a significant impact on capital investors as they lose confidence, and investor sentiment would also be affected due to concerns about de-dollarisation in the global market,” he said. 

Prime Minister Datuk Seri Anwar Ibrahim previously said that the use of the local currency in trade was well-received, particularly by China and Asean countries, namely Indonesia and Thailand.

He said 25% of  Malaysia's total trade with China used the ringgit and China's renminbi, amounting to RM39.2 billion, from a total of RM157 billion.

Anwar also said that as of August, 16.7% of Malaysia's total trade with Indonesia used the ringgit and Indonesian rupiah, totalling RM10.7 billion; while with Thailand, 19.6% of Malaysia's total trade used the ringgit and Thai baht, amounting to RM8.2 billion.

Thus, Lee said these figures would demonstrate that more market participants would like to diversify their assets and investments and prefer to directly use local bilateral currencies to mitigate risks. 

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