Malaysia in­ter­venes to help sag­ging ring­git

Kuwait Times - - BUSINESS -

KUALA LUMPUR: Malaysia’s cen­tral bank is in­ter­ven­ing in mar­kets to sup­port the be­lea­guered ring­git, an of­fi­cial said yes­ter­day, as re­gional au­thor­i­ties grap­ple with a surg­ing dol­lar.

Bank Ne­gara Malaysia As­sis­tant Gov­er­nor Ad­nan Zay­lani replied “Yes” when asked by re­porters on Fri­day whether the cen­tral back was in­ter­ven­ing in the for­eign-ex­change mar­ket, Bloomberg News re­ported. The ring­git has weak­ened by around five per­cent since last week’s sur­prise pres­i­den­tial elec­tion vic­tory by US bil­lion­aire Don­ald Trump.

Trump’s prom­ises to ramp up spend­ing on in­fra­struc­ture and cut taxes has led to warn­ings of a surge in in­fla­tion. That could force the pol­icy-set­ting US Fed­eral Re­serve to hike in­ter­est rates to cap prices, which has led to a rush back into the dol­lar.

But Ad­nan poured wa­ter on the pos­si­bil­ity that Malaysia could im­ple­ment cap­i­tal con­trols to shield the ring­git, call­ing spec­u­la­tion over such mea­sures “base­less” and say­ing they would ul­ti­mately be dam­ag­ing. Spec­u­la­tion of such con­trols rose af­ter the bank is­sued a state­ment ear­lier this week that was widely in­ter­preted as seek­ing to curb trad­ing of ring­git fu­tures.

The ring­git had al­ready been among Asia’s worstper­form­ing cur­ren­cies over the past two years amid the oil price slump and po­lit­i­cal fric­tions stem­ming from a cor­rup­tion scan­dal linked to Prime Min­is­ter Na­jib Razak. It has been widely spec­u­lated that the cen­tral bank has reg­u­larly in­ter­vened on be­half of the ring­git over that span, erod­ing its in­ter­na­tional re­serves. The en­ergy-ex­port­ing, trade-de­pen­dent Malaysian econ­omy has seen growth steadily slow in re­cent years. Eco­nomic growth came in at 4.3 per­cent in the third quar­ter, snap­ping a string of five straight quar­ters in which the pace of ex­pan­sion slowed, Bank Ne­gara said last week. Con­cern also has risen in Malaysia over the po­ten­tial for clashes be­tween re­formists who plan a rally to­day to de­mand Na­jib’s re­moval over the scan­dal, and a pro­gov­ern­ment group that has vowed to con­front the demon­stra­tors.

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