Source: The Edge
Bank Negara Malaysia has no intention of imposing capital controls and is merely clamping down hard on speculative activities on the ringgit, assistant governor Adnan Zaylani Mohamad Zahid said.
"[Perception of capital controls] is overdone, because we are not putting in anything new for fund managers. There is no restriction for fund managers, asset managers, corporates, residents, all of them are operating under existing foreign exchange administration (FEA) rules. Nothing has changed. In fact, for all the other banks, they're free to come and go. It is only [for] transactions that are supported or related to non-deliverable forwards (NDFs)," he told reporters in a briefing today.
Adnan assures that Malaysia remains an open economy and conditions do not warrant measures as drastic as capital controls, dismissing its one week old action against NDF trades, as merely tighter enforcement of existing rules.
"The situation and conditions are vastly different [from 1998 Asian financial crisis]. Now we have a very open economy. Investors come and go in our market... Even if we contemplate [capital controls], it is far too damaging and too risky for the economy... I just can't see that. So definitely no capital controls. There is no discussion of moving in that direction, but what we're trying to do is have a targeted measure to try and contain the offshore NDF market," he said.
"The ringgit being non-internationalised is one protection that we have and that would already prevent the kind of destabilising forex market that we had in 1998," he added, assuring there remains ample liquidity in the onshore market.
"Fund managers, corporates who are concerned about liquidity in the offshore market — they're more than welcome to come into the onshore market and transact with our licensed banks, which would include some of the foreign banks that they are used to," Adnan said.
He also said Bank Negara is intervening in the ringgit market and that it's reserves remain at a "comfortable" level, although lower than pre-"taper tantrum" levels.