Malaysian money changers have been warned not to hoard foreign currencies to profit from the slumping ringgit, The Malaysian Insider news site reported yesterday.
Malaysian Association of Money Services Businesses (MAMSB) chief Ramasamy Veeran said stockpiling to profit from the weak ringgit could pose risks in a volatile market.
"It is not a standard practice or a norm," Mr Veeran told The Malaysian Insider. "If there are adverse changes in currency exchange rates, the money changers could suffer a loss if they are stockpiling foreign currencies."
Yesterday, the ringgit gained as much as 0.5 per cent to 3.786 to the US dollar, its strongest level since July 10. It had slumped 8.1 per cent against the dollar since the start of the year amid falling crude oil prices and the scandal involving government investment firm 1Malaysia Development Berhad (1MDB) .
Prime Minister Najib Razak, who also serves as Finance Minister, sits on 1MDB's advisory board as chairman. He is battling allegations that he received billions of ringgit from entities linked to 1MDB in his personal bank accounts. 1MDB's debt to the tune of RM42 billion (S$15 billion) has weighed heavily on the ringgit's performance.
The ringgit was trading at RM2.778 to the Singdollar yesterday, having recovered from a low of RM2.81 earlier this month.
Mr Ramasamy said MAMSB has yet to receive any complaints about money changers withholding foreign currencies, but warned that such actions could have an impact on various sectors of the economy.
"Stockpiling and withholding of foreign currencies can create an artificial shortage of foreign currency which can impact areas such as tourism," he said.
The public can lodge complaints with the association or with Bank Negara Malaysia against errant money changers, following which MAMSB will take action, he said.