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