Kesatuan Kita Bersama

MALAYSIA

At the beginning of 1997, the KLSE Composite index was above 1,200, the Ringgit was trading above 2.50 to the dollar, and the overnight rate was below 7%.However everthing change in July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was "attacked" by speculator (named as George Soros).The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. By end of 1997, ratings had fallen many notches from investment grade to junk, the KLSE had lost more than 50% from above 1,200 to under 600, and the ringgit had lost 50% of its value, falling from above 2.50 to under 3.80 to the dollar.[1]

The decision to peg RM3.80 to 1.00 US Dollar was a controversial issue. In September that year, various defensive measures were announced in order to overcome the crisis. The principal measure taken was to move the ringgit from a free float to a fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar. Capital controls were imposed while aid offered from the IMF was refused. Refusing the IMF fund is really an outstanding decision, whereby it help Malaysia to reduce a lot of debt burden.[2]

The action that taken by Malaysian government got critics from a lot people, economist, and other country.This is because the decision that made by Tun Dr.Mahathir Mohamed at time is contradicted with other country decision and the theory that should be followed. But everything had been proven, when Malaysia managed to recover better than other country in South East Asian Region.

Today Malaysia has fully recovered from the crisis .The development doing well and gives a lot of benefits to people. The financial crisis had become a good lesson to all leader and people in Malaysia. Meanwhile, right now Malaysia slowly to release the pegging of RM3.80 with 1.00USD,the rate now slowly decrease as the good progress in Malaysia economic environment.