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Exchange rates matter for long-term wage growth, productivity and national well-being

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Date
2023
SDG:
Abstract
Of late there has been much hand wringing about the performance of the Malaysian ringgit. The ringgit's depreciation has been steady and sustained against several key currencies, in particular the US dollar. Indeed, there is cause for concern as exchange rates do matter for the long-term well-being of a nation. The experience of countries like Japan, South Korea, Taiwan and China show that cleverly managed exchange rates can be the enabler for national growth and prosperity. Yes, a nation needs much more than just exchange rate policies to succeed. But a well-formulated exchange rate regime can enhance competitiveness, incentivise the right type of industry formation, enable the macroeconomy to evolve as needed and optimise allocative efficiency. On the other hand, an ill-conceived exchange rate regime can stunt economic progression and nudge countries into a low-value-added, low-income trap.
Keywords
Exchange rates , Ringgit , National well-being , Malaysia
Citation
Bacha, O. I. (2023, July 5). Exchange rates matter for long-term wage growth, productivity and national well-being. The Edge Malaysia.
Publisher
The Edge Communications Sdn. Bhd.
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