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Malaysia's Ringgit Crackdown Spooks Overseas Investors

  • Restrictions are making market lose confidence, NAB’s Wee says
  • Global funds cut Malaysian debt holdings by most since 2008
An employee counts U.S. dollar banknotes using a money-counting machine at a currency exchange store in Bukit Bintang in Kuala Lumpur, Malaysia, on Tuesday, August 25, 2015.
Photographer: Sanjit Das/Bloomberg
Updated on

Malaysia’s crackdown on currency speculators has come at a cost. While it has successfully reduced ringgit volatility, it is threatening to discourage overseas investors.

The central bank’s steps to curb trading in offshore non-deliverable forwards last year made it harder for global funds to hedge their exposure to Malaysia, according to Macquarie Bank Ltd. Global funds cut holdings of Malaysian debt by a combined 25.2 billion ringgit ($5.7 billion) in November and December, the biggest two months of outflows since 2008, central bank data show.