Sep 22, 2015

    Ringgit 'can recover once 1MDB issue resolved'


    MALAYSIA'S central bank governor said yesterday that the ringgit - Asia's worst performing currency of the year so far - is expected to start recovering once issues surrounding troubled state fund 1Malaysia Development Berhad (1MDB) are resolved.

    1MDB has been the subject of multiple investigations, amid allegations of financial mismanagement and graft.

    Prime Minister Najib Razak, who also chairs the fund's advisory board, has resisted calls for him to step down from government, but controversies rage on. 1MDB is seeking to reduce its US$11 billion (S$15 billion) debt by selling power and property assets.

    "They (the ongoing investigations) are going to yield an outcome," Bank Negara Malaysia chief Zeti Akhtar Aziz said at an event in the capital city organised by government think-tank Pemandu.

    Besides a resolution of domestic issues, Dr Zeti said other factors which could prompt a recovery in the ringgit included an eventual decision by the United States Federal Reserve to raise interest rates, a recovery in global commodity and energy prices, and an improvement in China's economy.

    The ringgit came under further pressure yesterday after The Wall Street Journal reported that the US Federal Bureau of Investigation launched an investigation into allegations of money laundering at 1MDB.

    The currency slid 1.3 per cent to 4.26 per US dollar as of 7.25am GMT (3.25pm Singapore time) from the previous close of 4.207. It has now lost nearly 18 per cent of its value against the dollar so far this year.