KUALA LUMPUR: The tendency to compare the Malaysian ringgit with the United States dollar must stop, Finance Minister Tengku Datuk Seri Zafrul Aziz said.
He said although the ringgit has depreciated against the greenback, the former had appreciated against many other currencies such as the Japanese yen, Korean won, Phillipine peso, and the United Kingdom pound sterling.
Tengku Zafrul explained that when the government tightened its monetary policy, it also affected the countries.
"Bank Negara Malaysia raised its interest rates by 25 basis points to 2.25 per cent last month. Even the European Central Bank (ECB) has increased its rates for the first time in many years.
"At the end of the day, the value of any currency is backed by the fundamentals of the economy.
"Money flow in the short term reacts to interest rates ... and interest rates is the monetary tool used to address high inflation," he told reporters after his keynote address at the 16th Malaysian Student Leaders' Summit.
When asked if cryptocurrency could be used in the long term instead of the ringgit, Tengku Zafrul said there was no correlation between ringgit and cryptocurrency.
"Cryptocurrency is not recognised in Malaysia as legal tender and it is not a payment instrument regulated by the central bank (Bank Negara).
"Cryptocurrency still has a long way to go. We may focus on digital currency (means of payment in electronic form) which is what the central bank is looking into," he said.