Bank Negara to intervene to arrest ringgit plunge

Nov 18, 2016

 

The ringgit has weakened by around five per cent since last week's surprise presidential election victory by US billionaire Donald Trump.
The ringgit has weakened by around five per cent since last week’s surprise presidential election victory by US billionaire Donald Trump.

The weakening Malaysian currency since last week has made Bank Negara Malaysia (BNM) intervening in foreign-exchange markets to support the struggling ringgit.

BNM Assistant Governor Adnan Zaylani confirmed this with reporters when met at the Central bank in Kuala Lumpurr today, Bloomberg News reported.

The ringgit has weakened by around 5% 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.

It has been widely speculated that the central bank has regularly intervened on behalf of the ringgit over that span, eroding its international reserves.

Economic growth came in at 4.3% in the third quarter, snapping a string of five straight quarters in which the pace of expansion slowed, Bank Negara said last week.

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