Prime Minister Abdullah Ahmad Badawi and the central bank today said the country's currency peg against the dollar would not be reviewed at this stage, rebuffing former premier Dr Mahathir Mohamad, the man who imposed the peg but now says it is time for a change.

Abdullah, who took over when Mahathir retired in October 2003 after 22 years in power, said the peg of RM3.80 to the dollar would remain for the time being.

"There is no change at this point," he was quoted as saying by the official Bernama news agency.

"If there comes a time when changes are required to be made for the benefit of the people, we would consider making the changes then," he said when asked to respond to Mahathir's comments.

Abdullah, who is also finance minister, said however, that his ministry would analyse the situation regularly.

Bank Negara governor Zeti Akhtar Aziz meanwhile told reporters that the government would take a fresh look at the peg only if the currency became fundamentally misaligned or if there was a major structural change within international or regional financial systems.

"Currencies change from time to time. We already said we don't look at just one currency. We look at many currencies. We want stability in our exchange rate against our major trading partners," Zeti said when asked to comment on Mahathir's remarks.

"We said at the very outset that we will look at developments and if there are fundamental structural changes that have taken place or if there are potential misalignments of our currency, we will review the situation," she said.

Mahathir, who controversially pegged the ringgit to the US dollar and imposed capital controls in 1998 amidst the Asian financial crisis, said Wednesday it was time to review the currency peg.

The weak US dollar had caused the ringgit to depreciate against major currencies, Mahathir said, adding: "I feel the time has come for us to review because we have lost a lot as the value of our currency has fallen."

Mahathir, who was also finance minister, had defied International Monetary Fund (IMF) prescriptions by pegging the currency, inviting predictions of doom from many international economists.

Following China

However, the IMF has since acknowledged that Mahathir's actions enabled the country to weather the crisis better than many of its neighbours.

Mahathir has joined a growing chorus of calls for a review of the peg. He said the sharp decline in the value of the dollar meant it was now costlier to import products from Japan, Europe and elsewhere.

Pressure for change has led to an inflow of funds from overseas speculators hoping to take advantage of any upward shift in the ringgit's value.

Speculation that China may adjust its own currency peg to the dollar and allow the yuan to rise has lent strength to the belief that Malaysia may follow suit as its economy has recovered strongly and exports are at a record high.