More SGX ringgit derivative fallout


In November last year, it forced currency traders overseas to stop driving the ringgit lower. It demanded that banks operating in Malaysia sign a commitment to cease trading of the currency on the offshore non-deliverable forward market.

The move came after the central bank saw how onshore rates were taking cues from abroad, as well as the fact that much of the trading offshore was speculative and had a huge influence on the ringgit’s value against the US dollar.

Bank Negara recently said that the supply of and demand for foreign currencies became more balanced after the implementation of its measures.

Stephen Innes, the head of trading (Asia Pacific) at OANDA noted that the measures Bank Negara took benefited Malaysia because it stopped “all the waves of currency speculation”.

“I thought this was a natural progression to move the trading of the Malaysian ringgit from an over-the-counter market to a credible exchange driven market,” he said. “It is bringing back speculators and bringing back market makers – two big elements that the onshore markets are missing.”

Mr Innes said those elements provide liquidity and without them, onshore liquidity becomes a concern. “I think allowing international investors access to more freely tradable and open markets – that would’ve been great for the Malaysian capital market in a sense that international investors can easily hedge their ringgit exposures,” he stated.

Channel NewsAsia

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes