Malaysian govt to stop defending weak ringgit<\/p>\n
KUALA LUMPUR (AFP): The Malaysian government will stop
\ndefending the ringgit, which has been battered in recent weeks by
\ncurrency speculators, Premier Mahathir Mohamad said in remarks
\npublished Saturday.<\/p>\n
\"We are satisfied with the ringgit's position. Although its
\nvalue has dropped, we will not do anything. We are confident that
\nit will recover,\" Mahathir was quoted as saying in The Star
\nnewspaper.<\/p>\n
\"If we continue to defend the ringgit, they (speculators) will
\nget profits. We do not want to give them such profits,\" the
\npremier said, adding the ringgit did not suffer as much as the
\ncurrencies of some other countries.<\/p>\n
The local unit had plunged by about four percent against the
\nU.S. dollar in July amid regional currency turmoil, set off when
\nthe Thai baht was floated on July 2.<\/p>\n
Malaysia's central Bank Negara had said reserves plunged by
\nabout 8.8 billion ringgit (US$3.38 billion) to 61.9 billion
\nringgit in the two weeks to July 15, apparently reflecting
\nintervention to support the ringgit.<\/p>\n
The central bank Monday imposed a new ruling limiting non-
\ncommercial ringgit sales to two million dollars per foreign
\ncustomer to curb speculation.<\/p>\n
But the ruling caused a liquidity squeeze in the money market
\nand drove interest rates up and Bank Negara was forced to inject
\nfunds into the money market to ease rates early in the week.<\/p>\n
Analysts said Bank Negara could have come under pressure to
\ntake action following Mahathir's recent strong remarks against
\nrogue speculators, who he alleged were led by U.S. billionaire
\nfinancier George Soros.<\/p>\n
Soros and U.S. government officials dismissed that charge.<\/p>\n
Asked why he had changed his mind on defending the ringgit,
\nMahathir said: \"There is no change. As a matter of principle, I
\nstill oppose the idea that somebody can fiddle around with our
\ncurrency. We have lost our sovereignty.\"<\/p>\n
The Malaysian leader did not indicate whether he would agree
\nto a request by Soros for a meeting at the September
\nInternational Monetary Fund-World Bank annual meeting in Hong
\nKong to discuss the issue.<\/p>",
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