Pub­lic told to go to banks for forex needs

> Bank Ne­gara seeks to curb NDF mar­ket in­flu­ence, says it is tak­ing mea­sures to re­in­force ex­ist­ing rules

The Sun (Malaysia) - - MEDIA & MARKETING -

PETALING JAYA: Bank Ne­gara Malaysia (BNM) yes­ter­day ad­vised the pub­lic to ap­proach li­censed banks for their for­eign ex­change needs, days af­ter spec­u­la­tive trad­ing in the non­de­liv­er­able for­ward (NDF) mar­ket threw the ring­git into a spin.

Bank Ne­gara said in a state­ment that there is no change in for­eign ex­change ad­min­is­tra­tion (FEA) rules and it is tak­ing mea­sures to re­in­force ex­ist­ing rules that have been in place to pro­hibit fa­cil­i­ta­tion of ring­git NDF.

“BNM would like to re­mind all mar­ket par­tic­i­pants to ob­serve com­pli­ance with the ex­ist­ing FEA rules and the Malaysian li­censed banks must avert from fa­cil­i­tat­ing any for­eign ex­change (FX) trans­ac­tion that could be re­lated to off­shore ring­git NDF mar­ket ac­tiv­i­ties,” it said.

Re­ports state the ring­git’s one-month non-de­liv­er­able for­wards (NDFs) lost as much as 3.7% from the pre­vi­ous close to 4.5395 per US dol­lar last Fri­day.

BNM, how­ever, which does not recog­nise off­shore trad­ing of the ring­git, man­aged to keep a tight hold on the cur­rency, en­sur­ing min­i­mal move­ment on­shore.

The cen­tral bank’s mid­dle rate for the ring­git against the dol­lar stood at 4.285 on Fri­day, in com­par­i­son. This how­ever, did not stop money chang­ers from chang­ing their rates, with some of­fer­ing to buy the dol­lar at 4.24 and sell at 4.37 on Fri­day.

“Malaysia’s FX mar­ket re­mains open and BNM stands ready to pro­vide liq­uid­ity if nec­es­sary to en­sure an or­derly mar­ket. Malaysia con­tin­ues to wel­come real in­vest­ments and pro­vide all av­enues for FX trans­ac­tions and hedg­ing re­quire­ments on­shore,” BNM said.

For­eign fund and as­set man­agers have also been ad­vised to con­tact Malaysian li­censed banks for ad­vices and ex­e­cu­tion of any for­eign ex­change trans­ac­tions. All Malaysian li­censed banks will con­tinue to fa­cil­i­tate cus­tomers’ re­quests for for­eign ex­change ser­vices sub­ject to com­pli­ance with FEA.

The lat­est move by the BNM is in keep­ing with com­ments made by gov­er­nor Datuk Muham­mad Ibrahim on Fri­day, who said the ring­git should not be de­ter­mined by spec­u­la­tive po­si­tion­ing, like in the NDF mar­ket.

The cen­tral bank said as the ring­git is a non-in­ter­na­tion­alised cur­rency, prices should be fully de­ter­mined by on­shore fi­nan­cial mar­ket trans­ac­tions that are driven only by the fun­da­men­tals and gen­uine trade and in­vest­ment ac­tiv­i­ties in Malaysia.

“Our ring­git level must be sup­ported and dic­tated by the un­der­ly­ing trans­ac­tion as con­tracted by banks,” Muham­mad told a press con­fer­ence in Kuala Lumpur last Fri­day af­ter an­nounc­ing the coun­try’s third quar­ter eco­nomic per­for­mance.

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