COMMENT | Were Prime Minister Anwar Ibrahim and his Madani government responsible for turning the ringgit around? And were they responsible when the ringgit declined earlier this year?

The answer to both questions is a resounding no! 

This Madani government cannot claim credit for short-term movements in the ringgit just as they are not to blame for the most recent decline of the ringgit from around 4.1 to the US dollar to the 4.3 mark and the decline earlier this year.

As anyone who knows foreign exchange markets and any economist worth his salt will tell you, short-term movements in the ringgit are due almost entirely to immediate demand and supply for the currency.

Short-term demand can be affected by things such as delays in the remittance of US dollar earnings to Malaysia for various reasons and even converting US dollar loans to ringgit proceeds.

The former delays a demand for ringgit. The latter increases the short-term demand for the ringgit although the long-term effects may be deleterious if the loan taken is not wisely used to earn foreign exchange but is squandered instead.

Repayment in US dollars means outflows. Think 1MDB for instance.

The true test of whether economic policies are actually working to increase the ringgit’s value is...