KUALA LUMPUR: Bank Negara Malaysia (BNM) will not be pegging the Ringgit as the currency should not be decided on speculative positioning.
Speaking to reporters during the third quarter Gross Domestic Product (GDP) announcement today, BNM governor Datuk Muhammad Ibrahim touched on the erratic Ringgit movement in the morning.
“The Ringgit should not be determined by speculative positioning and in this respect the FX market is actually a speculative positioning.
“It is very important we allow the market to decide on the level of the Ringgit. Our Ringgit level must be supported and dictated by the underlying transactions as contracted by the banks on a daily basis.
“In some circumstances, the Ringgit market will be volatile, and it is incumbent upon the Central bank to show its presence in the market by asking banks to ensure that the pricing are correctly done,” he said.
“We do not want the market to be dictated by certain circumstances or matters that has nothing to do with the nation’s economic fundamentals,” he added.
This was in response to rumours that the Central Bank has directed banks to freeze all FX derivatives and FX spot transactions involving the Ringgit.
All other transactions involving only foreign currencies will continue. BNM has however confirmed that there was no such freeze and an official statement would be issued later today.