Malaysia intervenes to help sagging ringgit
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.