Bank Negara Malaysia Forex
Bank Negara Malaysia Forex or BNMF is the Malaysian central bank foreign
exchange. Its headquarters is located in Kuala Lumpur, the capital of Malaysia,
and was established on January 26, 1959 (as the Central Bank of Malaya or Bank
Negara Tanah Melayu) to issue currency, act as banker and adviser to the
Government and influence the country's credit situation.
Governors
Since its inception there have been seven governors.
Governor Year
Tan Sri W H Wilcock January 1959 - July 1962
Tun Ismail bin Mohamed Ali July 1962 - July 1980
Tan Sri Abdul Aziz bin Taha July 1980 - June 1985
Tan Sri Dato' Jaffar bin Hussein June 1985 - May 1994
Tan Sri Dato' Ahmad bin Mohd Don May 1994 - August 1998
Tan Sri Dato' Seri Ali Abul Hassan bin Sulaiman September 1998 - April 2000
Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz May 2000 - Current
Recent history
In 1985, following the "Plaza meeting" of G-5 finance ministers in New York
City, the US dollar fell sharply causing major losses in Bank Negara's dollar
reserves. The bank responded by starting a program of aggressive speculative
trading to make up these losses. Jaffar Hussein, the Bank Negara Governor at the
time, referred to this strategy as "honest-to-God trading" in a December 1988
speech in New Delhi.
In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player
in the forex market. Its activities caught the attention of many; initially,
Asian markets came to realize the influence Bank Negara had on the direction of
forex market. Alan Greenspan acting the Federal Reserve chairman later realized
Bank Negara's massive speculation activities and requested the Malaysian central
bank to stop it.
BNM sold between $500 million on September 21, 1990 - $1 billion worth of pound
sterlings in a short period, driving the pound down 4 cents on the dollar (Millman,
p. 228). In response, bankers began front running Bank Negara's orders. Two
years later, Bank Negara attempted to defend the value of the British pound
against attempts by George Soros and others to devalue the pound sterling.
George Soros won and Bank Negara reportedly suffered losses of more than USD $4
billion. Bank Negara lost an additional $2.2 billion in speculative
trading a year later . By 1994, the bank became technically insolvent and was
bailed out by the Malaysian Finance Ministry.
In 1998, Bank Negara pegged 3.80 ringgit to a US dollar after the ringgit
substantially depreciated during the 1997 Asian financial crisis. In July 2005,
the central bank abandoned fixed exchange rate regime in favor of managed
floating exchange rate system an hour after China floated its own currency. This
resulted in capital flight of more than USD 10 billion, thought to be due to the
repatriation of speculative funds that entered the country in anticipation of
the abandonment of the peg: - Bank Negara's foreign exchange reserves increased
by USD24 billion in the one year period between July 2004 and July 2005 (see
table below). During this period there was widespread believe that the ringgit
was undervalued and that if the peg was removed, the ringgit would appreciate.
Table: Bank Negara Foreign Exchange Reserves (Source: Bank Negara, rounded to
the nearest billion USD)
31 July 2004 - USD54 billion.
31 December 2004 - USD 66 billion.
31 July 2005 - USD 78 billion.
31 March 2007 - USD 88 billion.
31 July 2007 - USD 99 billion.
Bank Negara continues to run negative interest rate differential to USD. The
ringgit has appreciated gradually since the peg was abandoned and as at 28 May
2007, it traded at around 3.40 to the US dollar. Malaysia's foreign exchange
reserves have increased steadily since the initial capital flight, and as at 31
March 2007 the reserves stood at approximately USD88 billion, which is
approximately USD10 billion more than the reserves just prior to the peg being
abandoned.
In 31 July 2007 the Malaysian reserves stood at approximately USD98.5 billion
which is equivalent to RM340.1 billion
Locations
Bank Negara's headquarters is located at Jalan Dato' Onn in Kuala Lumpur. A KTM
Komuter station with the same name is located next door. An overhead crossing
over Jalan Kuching and the Gombak River allows pedestrians access to the
Bandaraya LRT station and the rest of downtown Kuala Lumpur.
Bank Negara had previously maintained branches in each of the country's state
capitals. Most of them were closed in the 1990s when retail banks began taking
over most of the counter services. There are still branches in Penang, Johor
Bahru, Kota Kinabalu, Kuching and Kuala Terengganu, while the Shah Alam branch
was converted into a currency distribution and processing centre. Bank Negara
also retains representative offices in London and New York City, and a personnel
training centre in Petaling Jaya, Malaysia.
Contact Information
Call our office today to set up an appointment. Learn more about how we can
help you, and learn more about the other services that we can offer you. All
messages we receive will be answered as soon as possible. We look forward to
hearing from you.
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