KUALA LUMPUR: The ringgit rebounded against the US dollar early Monday after Bank Negara Malaysia said it would curb speculative activity in the offshore market which has driven the currency far off from its fundamentals.
The ringgit was at 4.3165 at 8.44am, the highest since Jan 22 compared with 4.3418 last Friday.At 8.59am, the ringgit was at 4.3333 against the US dollar.The non-deliverable forward (NDF) in the offshore market showed the bid was at 4.3300 and ask was at 4.3365, which was a spread of 0.0065.
The one-month NDF bid was at 4.4740.StarBiz reported that in a bid to stabilise the volatile ringgit, Bank Negara is expected to maintain precautionary measures to ensure proper price discovery.The central bank will also curb speculative activity in the offshore market which has driven the currency far off from its fundamentals.It is learnt that banks have been told to disclose price quotes as soon as currency trading begins Monday to facilitate orderly trading and prevent a recurrence of last Friday when they were unable to disclose foreign exchange prices for a large part of the day.
However, there will be close scrutiny to ensure there is no abuse of the US dollar-ringgit transactions. Towards this end, the central bank said in a statement yesterday that banks must not facilitate trades that could be related to offshore ringgit market activities which it does not recognise.
It is learnt that the restrictions by Bank Negara came after it saw high volatility in the US dollar-ringgit exchange rate in the offshore market that is known as the ringgit non-deliverable forward (NDF) market.
Dealers tend to observe the offshore rates in the early trading session for clues on how to price the US dollar against the ringgit until the official exchange rate is published by 3:30pm. Offshore US dollar-ringgit rates, as indicated by the one-month ringgit NDF, went as high as 4.535 against the dollar before settling down at 4.4865.
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