Offshore trading of ringgit illegal, Bank Negara reminds Malaysians

PETALING JAYA: Bank Negara Malaysia (BNM) has clarified that Malaysian market participants are not allowed to engage in any offshore trading of the ringgit outside Malaysia.
Governor Datuk Muhammad Ibrahim said the statement issued by the central bank objecting the introduction of the ringgit futures on the Singapore Stock Exchange was meant for Malaysians.
“We want to remind them (Malaysians) that any trading of dollar-ringgit outside Malaysia is illegal and not allowed. If they’re found engaging in illegal activities, we will certainly take action. It’s adequately provided under the law,” he said at a press conference last Friday after announcing Malaysia’s Q2 GDP.
BNM had reminded all market participants to observe the existing foreign exchange administration (FEA) rules. It said contravention of the FEA is an offence under the Financial Services Act 2013 and Islamic Financial Services Act 2013. Appropriate action under the law will be taken against any person who does not comply with prevailing rules and regulations.
“These are not new policies. We’re just highlighting that the ringgit is a non-internationalised currency and should not be traded outside Kuala Lumpur.
“If residents, including individuals and banks operating here, engage in any illegal activities that contravenes with the Financial Services Act, we will take action,” stressed Muhammad.
Meanwhile, he said there has been a decoupling between the ringgit exchange rate and global crude oil prices in the recent period. Increasingly, investors have begun recognising Malaysia’s lower dependence on oil revenue. He said the ringgit’s strengthening reflects the strength of the economy.
Based on a survey that BNM conducted early this year, it found that the exchange rate depreciation has limited impact on export volume.
“Ultimately, prospects for sustained external performance will be driven by product quality and better access to foreign markets. Producers that rely on exchange rate for competitiveness is an unsafe business strategy,” said Muhammad.