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.