Exclusive: Malaysia demands foreign banks commit to stop offshore ringgit trading - sources
- Wall Street rises, buoyed by economic data; Dow sets high
- Twitter (TWTR) 'Takeover Money' Moves On as 'Trump Money' Moves In
- Amazon (AMZN) Could Open Over 2,000 Brick-and Mortar Groceries if Tests Succeed - DJ; Kroger (KR) on Watch
- Buy Any Seasonal Market Weakness Ahead of Year End Rally - Oppenheimer (SPY)
- After-Hours Stock Movers 12/05: (TXMD) (COUP) (BOBE) Higher; (SB) (LXRX) (STWD) Lower (more...)
A general view of the headquarters of Malaysia's central bank, Bank Negara Malaysia, in Kuala Lumpur January 29, 2013. REUTERS/Bazuki Muhammad/File Photo
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
By Saikat Chatterjee and Jongwoo Cheon
HONG KONG/SINGAPORE (Reuters) - Malaysia's central bank is asking foreign banks to make a written commitment to refrain from trading the ringgit in the offshore non-deliverable forwards market in its latest move to protect a weakening currency, banking sources said.
The central bank has sent a form letter to foreign banks, which asks for an "unconditional representation and commitment" to stop trading in any offshore Malaysian ringgit
Two separate sources at banks confirmed receipt of the letter.
The letter also asks financial institutions to provide a detailed plan to the central bank of its needs to make ringgit transactions onshore and to seek help from Malaysian financial institutions for any foreign exchange transaction needs.
The letter is a marked change from Saturday's central bank notification, in which foreign funds and asset managers were asked to contact Malaysian licensed banks to execute any foreign exchange transactions. It suggests authorities are tightening controls on the ringgit.
"It's not surprising, given how much MYR (ringgit) has lost. It sounds like a desperate intervention," said Nordea Markets' chief analyst Amy Yuan Zhuang in Singapore.
Bank Negara's comparatively small foreign reserves compared to other Asian countries, has left the central bank with fewer options, she said. "It needs such measures more than other Asian central banks."
At 40 percent of the total outstanding bond market, Malaysia's foreign holdings are one of the largest in Asia. Investors typically use the liquid NDF markets in Singapore and Hong Kong to hedge their exposure because of the many restrictions in the domestic market.
(Editing by Bill Tarrant.)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Threat called in against Los Angeles Red Line commuter rail system: officials
- Contenders line up to replace New Zealand's outgoing leader
- Merkel's conservatives meet to prepare for 'toughest' election
Create E-mail Alert Related CategoriesReuters
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!