Malaysian PM Najib says central bank's measures will stabilise ringgit

A screen displaying various foreign currency exchange rates including the US dollar against the Malaysian ringgit is seen at a money changer in Kuala Lumpur on Dec 19, 2016.
A screen displaying various foreign currency exchange rates including the US dollar against the Malaysian ringgit is seen at a money changer in Kuala Lumpur on Dec 19, 2016.PHOTO: AFP

KUALA LUMPUR - Malaysian Prime Minister Najib Razak said on Monday (Jan 9) that new measures taken by the central bank will help stabilise the ringgit currency, state news agency Bernama reported.

Mr Najib, who is also the finance minister, said of 149 world currencies, 123 faced a decline in value against the US dollar and Malaysia was not exempted nor the only country to be impacted. Excessive speculation in the offshore market, the fall in oil prices and rise in US interest rates last December, influenced the ringgit's fall, he added.

He said the decline was a source of concern but the situation was outside the government's control, The Star newspaper added.

Bank Negara implemented measures in November to curb offshore trade of the ringgit and stem the fall of a currency that was one of Asia's worst performers in 2016.

"With the measures taken by BNM, the market is convinced that the ringgit will be more stable and volatility curtailed to normal levels in the near term," he told the first monthly gathering of the Prime Minister's Department for 2017.

Bank Negara Malaysia (BNM) sent out form letters last November from banks in Malaysia to their offshore counterparts and clients asking them to sign a commitment to cease trading the ringgit in the non-deliverable forwards markets and then send the letters back to the central bank.

BNM governor Muhammad Ibrahim had said the central bank will implement several measures to boost onshore ringgit trade, particularly against the US dollar and Chinese yuan.

These included a pilot programme that allowed onshore hedging of dollar and yuan transactions against the ringgit without the need to see underlying documents, and the introduction of onshore dollar and yuan futures against the ringgit.

The central bank governor had said it is also finalising an operational framework for foreign-exchange administration compliance that will set an industry standard for minimum due diligence and provide more clarity and efficiency in foreign exchange and hedging transactions.

The ringgit was trading at 4.4760 per US dollar.