Malaysia c.bank says interest rates still supporting growth

KUALA LUMPUR Mon Aug 26, 2013 11:18pm EDT

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KUALA LUMPUR Aug 27 (Reuters) - Malaysia's resilient domestic demand shows interest rates are supporting economic activity, and the central bank is not targeting a specific level for the exchange rate, Governor Zeti Akhtar Aziz said on Tuesday.

"Interest rates are supportive of the economy. Domestic demand has been strong, so there is still support," the central bank governor told reporters in the Malaysian capital.

Malaysia has kept rates steady at 3 percent since May 2011 as the trade-dependent country seeks to boost domestic consumption to counter weakness in its major export markets for commodities and electronics.

Zeti said the central bank has consistently asked exporters not to rely on the exchange rate to shore up incomes, but to look at boosting productivity.

"From time to time, we will see ringgit strengthen because of shifts in liquidity, other times we will see reversals," she said.

"What we focus on is an orderly financial market. We don't focus on any specific level for the ringgit," Zeti added.

The ringgit has fallen nearly nine percent against the dollar this year, with regional currencies hit by worries about funds leaving Southeast Asia ahead of an expected start of a moderation of U.S. monetary stimulus. (Reporting By Anuradha Raghu; writing by Niluksi Koswanage; Editing by John Mair)

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