Bank Negara acts against lender in ringgit fixing case

Bank Negara acts against lender in ringgit fixing case
PHOTO: Reuters

PETALING JAYA - Actions have been taken against a financial institution for failing to quickly report on an audit finding in relation to its dealers' misconduct for the fixing of the US dollar-ringgit exchange rate, according to Bank Negara.

"The finding indicates that there were communications with traders from other foreign financial institutions which included inappropriate references to the fixing rate submission process.

"In this regard, the Bank has commenced the due process as stipulated under the Financial Services Act 2013 (FSA)," the central bank said in a statement.

The central bank explained that it took such reporting breaches seriously, especially on financial institutions' involvement with offshore ringgit non-deliverable forward (NDF) market or any activities related to market manipulation.

"We will not hesitate to take appropriate enforcement actions against any other financial institutions which have breached provisions under the FSA," it said.

The actions may include the imposition of monetary penalties, issuance of a written order to comply, making public reprimands and issuance of a written order to mitigate or remedy such breaches, it said.

Bank Negara, however, did not mention the name of the bank involved.

The central bank has reminded all financial institutions to observe reporting obligations imposed under the FSA, in particular the requirement to promptly notify the central bank of any significant findings.

Bank Negara has issued several rules over recent weeks to curb ringgit speculation and has urged banks to disregard the offshore rates from the NDF markets and use the central bank's officially quoted onshore rates instead. Bank Negara also told local banks to not quote prices on the ringgit based on the NDF rate.

Additionally, it has requested that non-resident banks that trade in the foreign exchange market to attest that they will not engage in NDF-related transactions.

The central bank believed that the NDF market partly contributed to the decline in the ringgit against the US dollar.

The ringgit, which weakened to levels last seen during the Asian financial crisis in 1997, was the second worst-performing currency in South-East Asia on a year-to-date basis.

The currency has declined by as much as 6.5 per cent against the US dollar since Donald Trump's unexpected victory in the US presidential election in November.

On Dec 12, the ringgit traded at 4.482 a dollar, a level last seen since Jan 1998. The ringgit closed lower at 4.479 against the greenback yesterday.

Read also: Ringgit most badly hit among Asian currencies

Malaysian ringgit near 10-month low on bond sell-off

Should Singaporeans be happy when the Malaysian ringgit slumps?

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