Malaysia's central bank deputy governor, Adnan Zaylani Mohamad Zahid, has stated that the country will not utilise monetary policy to support its currency.

Instead, Bank Negara's decisions regarding monetary policy will be based on economic growth and the inflation outlook.

“We won’t use interest rates as a tool to somewhat defend the Ringgit,” despite the fact interest rate differentials have been “a key driver for much of the performance that we have seen so far,” the governor told CNBC’s “Squawk Box Asia” on Tuesday.

As it stands, the Ringgit doesn’t reflect the country’s economic fundamentals and growth prospects, according to a central bank statement published last week.

“External factors, namely shifting expectations of major economies’ monetary policy paths and ongoing geopolitical tensions, have led to heightened volatility in both capital flows and exchange rates across the region, including the Ringgit,” the bank added. 

Similarly, other Asian currencies like the Japanese Yen and Korean Won have faced pressure recently due to the ongoing strength of the US Dollar.  

This trend has been driven by expectations that the Federal Reserve might maintain higher interest rates for an extended period, given the persistent nature of inflation.

Bank Negara's deputy governor added that the bank forecasts the US interest rate cycle to turn at “some point in time,” which will subsequently reflect on the “Ringgit performance.”    

At the time of writing the Ringgit was trading at 4.726 to the Dollar.

Furthermore, the central bank has already adopted a series of steps to maintain currency stability, Adnan Zaylani told CNBC.

“We have continued our market operations — which is providing Dollars and providing liquidity to the market as and when it’s needed,” he said.

Additionally, the bank has been working alongside government-linked firms to repatriate “their foreign income and convert that into Ringgit,” which has helped to stabilise the currency, the deputy governor said.

“We’re also looking at how we can further bring in flows from corporates that have significant foreign currency balances abroad,” he added. 

The central bank held its benchmark interest rate at 3% last week, opting not to follow the recent rate hikes by other Southeast Asian countries such as Indonesia.