Malaysian forex controls 'help neighbors'<\/p>\n
KUALA LUMPUR (Reuters): Malaysia has long said currency
\ncontrols saved its economy from disaster.<\/p>\n
Now a senior central bank official says the controversial
\nmeasures rescued neighboring Asian economies as well.<\/p>\n
Bank Negara special adviser Nor Mohamed Yakcop said Malaysia's
\nneighbors owe their economic recovery to Kuala Lumpur's decision
\nin September to impose controls on foreign exchange flows.<\/p>\n
\"I may not be venturing too far if I were to say that the move
\ntaken by Malaysia to control foreign exchange had not only
\nrescued Malaysia but also other countries in the region,\" the
\nBernama news agency on Sunday quoted Nor Yakcop as saying.<\/p>\n
In a related development, Standard & Poor's said on Monday it
\nimposed a triple-'B'-minus senior unsecured rating to Malaysia's
\n$1 billion global bond launched last week.<\/p>\n
The successful issue, oversubscribed three times, was promoted
\nby Malaysia as a signal to the international financial community
\nthat the country's economic restructuring program was working.<\/p>\n
But S&P reiterated an earlier statement saying the country
\nremained over-leveraged and was lacking in its commitment to move
\ntoward a more transparent corporate system.<\/p>\n
Nor Yakcop joined Malaysia's central bank in September, days
\nafter the government imposed the currency controls and pegged the
\nringgit currency at 3.80 units per U.S. dollar.<\/p>\n
He had quit Bank Negara in 1994 after it declared a loss of
\nmore than 5.7 billion ringgit ($1.5 billion) due to errors in
\nforeign exchange transactions.<\/p>\n
Nor Yakcop said in a newspaper article, excerpts of which were
\npublished by Bernama, that several months before the exchange
\ncontrols were imposed, hedge funds managers and currency
\nspeculators were planning to sell off the currencies of Thailand,
\nIndonesia, South Korea and Malaysia.<\/p>\n
\"They gradually put their plan in action. When Malaysia
\nsuddenly imposed exchange control measures on Sept. 1, 1998, they
\npanicked and started buying back not only the ringgit but other
\ncurrencies in the region too,\" he said.<\/p>\n
\"The important thing was that they were forced to abort their
\nplan and to this day, they dare not make such a raid again,\" he
\nsaid.<\/p>\n
Nor Yakcop said the International Monetary Fund and Western
\nnations did not want Malaysia's currency controls to succeed.<\/p>\n
\"For reasons we all know, the IMF and the West did not want
\nMalaysia's exchange control measures to succeed because that
\nwould be undermining the credibility of the globalization policy
\nand free market which they championed,\" he said.<\/p>\n
Last year Malaysia decided not to turn to the IMF for
\nassistance, saying the Fund's prescription would set back its
\nrecovery hopes. Thailand, Indonesia and South Korea all adopted
\nIMF programs in exchange for emergency aid.<\/p>",
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