Malaysia warns of currency crackdown to stabilise ringgit

Reading Time:1 minute

A money changer counts Malaysian ringgit at a shop in Putrajaya outside Kuala Lumpur. The country’s Central Bank warned of a crackdown to ensure stability in the currency. Photo: Reuters

Published: 7:04am, 24 Mar 2017

Malaysia’s central bank will crack down on wrongdoing in the foreign-currency market, such as fixing of the exchange rate, to ensure stability in the ringgit, Governor Muhammad Ibrahim said.

Authorities plan to name and shame banks from next year that have been found guilty of misconduct, Muhammad told reporters in Kuala Lumpur on Thursday. In addition to naming the institution, the central bank will also disclose the amount of penalty imposed and the reason for the fine, he said.

“We will be very strict,” the governor said. Banks were told about the new measure -- which comes into effect in January next year -- earlier on Thursday, he said.

Construction workers paint a factory roof against the Twin Towers of Kuala Lumpur, Malaysia. Photo: EPA

In January, Bank Negara Malaysia said it imposed a 1.4 million ringgit (US$316,000) fine on a lender, which it didn’t name, related to a case of currency fixing. The central bank has also clamped down on foreign banks using offshore forwards to bet against the ringgit.

The ringgit has dropped about 5 per cent against the dollar since a rally in the US currency following Donald Trump’s election victory and amid a slump in sentiment against emerging markets. To bring more stability to the Malaysian currency, the central bank also imposed rules in December that capped the amount of foreign-currency proceeds exporters can hold at 25 per cent.