This was evident by the surging interest in the stock market and the stabilisation of the ringgit, Mahathir said while defending the measures aimed at defending the currency against speculative attacks.

With such positive developments in the market, "the measures are not bad at all," Mahathir said in response to a question on exchange controls at the bi-annual conference of the Commonwealth Association for Public Administration in Kuala Lumpur on Tuesday.

He said the exchange control measures have been very successful and people have regained confidence in the economy. "Generally, our economy is picking up and I hope it will continue," he said, adding that "we believe in free market, but we are not going to allow you to touch the ringgit."

To a question as to whether the government would remove a cap on lending for sharepurchases, he said "we will be watching the stock market closely."

"If it goes up too fast, there won't be any necessity to lift the lending cap, but if it moves sluggishly, we will make money available from the banks," he said.

On concerns whether a black market will emerge for the ringgit following the exchange control measures which would make the ringgit non-convertible overseas, he said "it can be controlled."