BNM’s RM32bil forex fiasco must not be repeated, say experts FMTNews FMTBusiness
Bank Negara Malaysia became increasingly aggressive in its foreign exchange trading in late 1980s and early 1990s, and suffered losses totalling almost RM32 billion.
On June 27, BNM assistant governor Adnan Zaylani announced that BNM will intervene in the forex market to stem currency movements that are deemed excessive, in an apparent bid to stabilise the ringgit, the worst performing currency among the emerging economies of Asia year-to-date. Yeah noted there are central banks which have strongly defended their currency and lost reserves to such an extent that it resulted in balance of payment problems.Any intervention by a central bank will be closely watched by currency traders, investors, and hedge funds to see if it results in losses that make it difficult to further defend the national currency, Yeah said.
Yeah said small and midsize countries whose reserves are not sizeable are prone to currency attacks, highlighting the example of US billionaire George Soros. Malaysia’s international reserves has registered a dip since BNM announced on June 27 it would intervene in the forex market.