Malaysia Fixes Currency
Sep. 02, 1998
KUALA LUMPUR, Malaysia (AP) _ Malaysia's central bank confirmed Wednesday that the country's currency has been fixed at 3.80 to the U.S. dollar, far stronger than what it was trading in the markets.
The move contradicted earlier statements by government officials that the ringgit rate would not be fixed and that the currency would be determined by supply and demand in the local market.
The currency was one of several sources of disagreement among Malaysia's leaders. The government said Wednesday that Anwar Ibrahim, deputy prime minister and finance chief, was fired after months of disagreeing with the prime minister on economic policy.
In a last-ditch effort to save his country's embattled economy, Prime Minister Mahathir Mohamad announced Tuesday that the government would ban trading of the ringgit outside the country. The measure was one on a sweeping list of capital controls that included halting the trade of Malaysian shares overseas.
Confused by what the measures mean, Singapore's stockbroking houses indefinitely halted trading on the Kuala Lumpur Stock Exchange, traders said Wednesday.
Traders said the move will hurt the houses, particularly international ones, as Malaysian markets account for ``a good chunk'' of their business.
Malaysian shares account for about a quarter of trading on the Singapore Stock Exchange.
Mahathir said reverting to a fixed exchange rate would fend off currency speculators and help insulate its fragile economy from further global shocks.