KL warns speculators to stay away from ringgit

KL warns speculators to stay away from ringgit

KUALA LUMPUR (AFP): Malaysia issued fresh warnings to currency
speculators yesterday against attacks on the ringgit amid
lingering market jitters over the recent crisis in neighboring
Thailand.

Acting Prime Minister Anwar Ibrahim, who is also finance
minister, said he had full confidence in central Bank Negara's
handling of speculation against the ringgit, Bernama news agency
reported.

He said Bank Negara was doing whatever it can to continue to
monitor the situation and ward off speculation against the local
currency, which appeared to be firming Thursday following
officials' assurance of support.

At 0430 GMT Thursday, the ringgit was quoted at 2.4980-2.4990
against the US dollar, dealers here said. It was trading at
2.5035-2.5050 late Wednesday.

Anwar said there was no reason for the strength of the ringgit
to be undermined given the country's current stability and strong
economic fundamentals.

Separately, economic adviser to the government Daim Zainuddin
said Bank Negara had enough reserves to support the ringgit
against speculators, and that Malaysia knew in advance that the
speculators were coming.

"If they still want to take the risk, they will have to face
the consequences. Bank Negara has taken action. They will lose
out," he added at an international fund managers' conference in
Kuala Lumpur.

Daim said he could not estimate the amount of speculative
funds that had arrived in Malaysia, which had foreign reserves of
about 28 billion US dollars at the end of June.

He said the speculators are now trying to attack as many
currencies as possible.

The Thai baht has plunged since the government decided to
float the currency last week, triggering speculative attacks on
the ringgit as well as the Philippine peso. This set off
immediate intervention by central banks in Manila and Kuala
Lumpur.

Asked about investor confidence in the Kuala Lumpur Stock
Exchange (KLSE), Daim said: "We have told investors repeatedly
that Malaysia's economy is not like Thailand. If they still
continue to believe in the speculation, what can we do?"

Share prices closed the morning sharply lower across the
board, with sentiment undercut by concerns over the ringgit,
higher interest rates and regional currency volatility, dealers
said.

The KLSE composite index closed down 19.79 points at 1,013.45.
Daim said local funds should take advantage of the cheap stocks
available now and to start leading the market.

"Our local bourse is not a mature market. The local investors
like to allow others to take the lead. The market has fallen. So,
local funds should start buying," he added.

As to the economy, Daim dismissed speculation that Malaysia is
likely to repeat Thailand's economic experience, saying Bank
Negara had taken pre-emptive measures to prevent any economic
downturn.

He cited the central bank's recent curbs on lending to the
property and share financing sectors as an example.

"Thailand is different. They have cheap source of funds and
the baht is pegged to the dollar," Daim said.

He said political stability in the country was one of
Malaysia's strongest points in sustaining economic growth.