Malaysia's central bank says there is no need for "extreme measures" such as pegging the currency or capital controls to halt a slide in the ringgit.

The Malaysian currency has slumped by 20 percent since September last year and sank beyond four to a dollar on Wednesday following China's surprise devaluation.

Bank Negara Malaysia governor Zeti Akhtar Aziz says the volatility in the ringgit was due to external challenges as well as "domestic issues that have generated uncertainties," in reference to controversy over debt laden state investment fund 1MDB.

Zeti says Thursday a flexible exchange rate regime is crucial and the financial system is strong enough to absorb the shock.

She says the economy will also remain on a steady growth path at between 4 and 6 percent.