Malaysia's central bank unveils measures to prop up tumbling ringgit

The Bank Negara Malaysia (BNM) announced a series of measures on Friday to encourage investors and exporters to hold the ringgit instead of the U.S. dollar, in a bid to prop up the underperforming Malaysian currency.

From Monday, exporters are only allowed to retain up to 25 percent of foreign currency from its exports of goods, the central bank said, adding conversion of ringgit must be made within six months.

Previously, exporters had the right to choose whether to convert ringgit into a foreign currency.

Exporters can only hold a higher balance with the approval from the central bank.

Since Donald Trump was elected the next U.S. president, major Asian currencies have been on a losing streak, but the ringgit seemed to be the worst performer, depreciating almost 6 percent, from 4.2200 ringgits for one U.S. dollar on Nov. 9 to 4.4480 ringgits for one dollar on Friday.

Prior to Friday's announcement, BNM already asked major banks to stop the trading of ringgit in the offshore non-deliverable forwards market. It also intervened in the forex market with its foreign reserve.

In addition to rules for exporters, BNM also allowed residents, including resident fund managers, to hedge the U.S. dollar and renminbi, the Chinese currency, to exposures up to a limit of 6 million ringgit per client per bank, another measure to stimulate the liquidity of the foreign exchange market.

These measures, said BNM, are intended to accelerate the development of Malaysian financial market and promote financial stability. Endit