Tuesday, October 26, 2010

Zeti: Malaysia to intervene if ringgit "disorderly"

KUALA LUMPUR: Malaysia's central bank will intervene in currency markets if movements in the ringgit become "disorderly", its governor Tan Sri Dr Zeti Akhtar Aziz said on Tuesday, Oct 26.

The ringgit has risen 10.5 percent against the dollar this year as investors pump cash into higher yielding emerging market assets, making it Asia's third-best performer among the currencies monitored daily by Reuters.

"It (the ringgit) is dependent on the inflows or outflows and the central bank is well positioned to undertake any sort of... intervene in the market if conditions become disorderly or very excessive movements taking place within a very short period of time," Zeti told reporters.

Zeti added there will be volatility and uncertainty in major currencies, not just in the ringgit.

The Malaysian central governor's comments come after the G20 partners pledged that advanced economies would be vigilant against disorderly exchange rate movements.

Japanese Finance Minister Yoshihiko Noda said earlier on Tuesday that Japan would take decisive steps on forex when needed, after Tokyo intervented in mid-September to try to slow the yen's rise.

A number of other Asian authorities have also been actively interventing to stem sharp appreciation of their currencies, fearing it could hit exports and stifle economic growth. Some other emerging economies such as Brazil have also taken steps to control foreign inflows.

Zeti also said the central bank did not see inflationary pressures at this point of time and it had the flexibility to contain any asset bubbles.

The economy would remain firmly on a growth path, but there will be moderation, she said.

On new licences for foreign banks, Zeti said the central bank hoped to announce later this year at least one licence for a mega Islamic bank. - Reuters

No comments:

Post a Comment