The impact of currency pegging on the manufacturing sector / Norma Wenceslaus

Exchange rate pegging is one of the economic measures undertaken by the Malaysian government in containing the financial crisis in 1998. The question as to whether it is really an effective measure in improving the overall economic performance of Malaysia has been the subject of serious discussion amongst academician, economist, researchers and other parties concerned. This project paper will attempt to examine whether the pegging of Ringgit Malaysia (RM) to the US Dollar has any impact on the country's manufacturing sector. For this purpose, the contributions of the manufacturing sector towards the overall Gross Domestic Product (GDP) and Capital Investments (CI) of both local and foreign investors will be the variables to be analyzed. The application of hypotheses testing, T-test and ANOVA statistical tools on data collected from secondary sources have produced somewhat perplexing but welcome result. The finding was that, the pegging of the RM to US Dollar did not have significant impact on the manufacturing sector, both before and during the imposition of the exchange control. The manufacturing sector has in fact continued to be one of the major contributors, if not the catalyst, to the overall Gross Domestic Product.