Malaysia may allow offshore ringgit trading

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KUALA LUMPUR, Oct 24 (AFP): Malaysia may scrap its remaining capital controls, introduced during the 1997 financial crisis, and allow offshore trading of the ringgit, the central bank chief said.
Bank Negara governor Zeti Akhtar Aziz told the New Straits Times that the move was designed to attract investment to Malaysia, but she did not say when the change would be introduced.
"Malaysia will consider removing this non- internationalisation of its currency when we have a very developed and vibrant foreign exchange market," she said in an interview in Washington.
Malaysia banned offshore trading of the ringgit and pegged the currency at 3.80 to the US dollar in 1998 to control currency speculation during the financial crisis which was ravaging East Asian economies.
The peg was removed in July 2005 and the current has appreciated steadily since then, to current levels of 3.36 to the greenback.
The offshore trading ban is the last of the capital controls to remain in place, and its removal would join a raft of recent measures aimed at spurring investment including tax breaks and the easing of race-based investment rules.
Zeti said that easing restrictions on ringgit trading would help Malaysia develop its domestic foreign currency market by increasing the volume of transactions.