‘Malaysia will not peg ringgit’

KUALA LUMPUR: Malaysia will not impose any pegging or capital control on its currency to encourage investors, corporations and financial institutions to undertake foreign exchange (forex) and hedging activities in Malaysia, said Second Finance Minister Datuk Johari Abdul Ghani.

He said the Australia and New Zealand Banking Group Ltd and Macquarie Bank cases were clearcut evidence that such speculative activity was rampant in the offshore market.

It was reported the banks had admitted to trying to rig a key benchmark rate in Malaysia’s forex markets and breaking cartel laws, resulting in multimillion-dollar fines.

Johari said he had advised investors to conduct such activities in Malaysia where their investments were protected and transparent.

He said Bank Negara Malaysia’s move to curtail the offshore forex market was justified.

“There is evidence of heavy speculative activities abroad, so I support Bank Negara’s action in ensuring that more forex and hedging activities are conducted onshore,” he said after flagging off the Kampong Bharu MTB Challenge, here, yesterday.

Johari said Bank Negara had put in place the mechanisms to ensure that all parties were protected from speculative activity in the offshore market.

Asked if speculative activity on the ringgit was still in play, he said: “You cannot stop people from speculating on our currency.”

He said the government had to create good economic fundamentals.

“We have to show them that we want to intensify our credibility, the trust in our system, so that people will have faith in it. I believe we have good fundamentals and the currency will come back to the level where it is supposed to be,” he added.