Malaysia curtail FX trades
(11 November 2016 – Malaysia) On Friday, Malaysia's central bank limited trading of the ringgit after overnight rates against the US dollar jumped by close to five percent.
Local banks were only allowed to offer dollars at the previous day’s cheaper range and for specific corporate payments only.
The move has sparked fears that the ringgit would face huge sell down when the controls are lifted.
Bank Negara Malaysia (BNM) made "direct instructions to banks" without further explanation to other stakeholders according to sources.
A banking source told The Straits Times that "Bank Negara told onshore banks not to provide any forex to offshore today and cannot trade higher than yesterday's range for today".
"This is effectively an unofficial capital control. Foreign bond holders can't even convert ringgit to foreign currency after selling bonds," the source added.
The central bank told state news agency Bernama that there is no freeze on forex trading involving the ringgit.
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