Economy sound, as fears mount: Malaysia PM

Prime Minister Najib Razak said on Thursday that Malaysia's economy was on a sound footing, seeking to assuage growing public and investor fears over the nation's plummeting currency and slowing growth.

"Malaysia's financial system resilience remains intact," Najib said, according to a statement from his office.

Najib, who is also finance minister, added that the plunging ringgit would not be pegged against the greenback to stem its decline, a step taken in the late 1990s amid an earlier precipitous fall.

The ringgit is Asia's worst-performing currency over the past year. It began falling initially on concerns that the world slump in oil prices will harm economic growth in oil-exporting Malaysia.

But market sentiment also has been hit by political uncertainty stemming from corruption concerns that have exploded following the revelation last month that hundreds of millions of dollars have been put into Najib's personal bank accounts since 2013.

China's surprise devaluation of the yuan last week also has pressured the ringgit.

The ringgit was at 4.12 to the dollar in Thursday trade, its lowest level since 1998, when Malaysia imposed a peg of 3.8 to the dollar during a regional financial crisis. It lasted seven years.

Najib said there would be no currency peg or other capital controls this time, citing Malaysia's "strong fundamentals and significantly different environment" today.

He added that ongoing diversification of the economy would help buffer it from the oil-price shock.