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Don’t Speculate On Currencies, Focus On Business, Says Rafidah |
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Written by Administrator
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Saturday, 27 October 2007 |
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The private sector has been warned not to indulge in currency speculation as their businesses could go bust if they get caught by volatile exchange rate movements.
In sounding out the alarm, International Trade and Industry Minister Datuk Seri Rafidah Aziz said they should instead focus on generating profits from their business operations.
Urging businesses not to stray away from their core operations, products and services, she said “if it (ringgit) opens today at 3.6 but tomorrow at 4.0, then you are dead.”
PARIS, Oct 26 (Bernama) — The private sector has been warned not to indulge in currency speculation as their businesses could go bust if they get caught by volatile exchange rate movements.
In sounding out the alarm, International Trade and Industry Minister Datuk Seri Rafidah Aziz said they should instead focus on generating profits from their business operations.
Urging businesses not to stray away from their core operations, products and services, she said “if it (ringgit) opens today at 3.6 but tomorrow at 4.0, then you are dead.”
The private sector should now learn to manage the little fluctuations of the ringgit and stop complaining about being “so used” to the ringgit being pegged at 3.8 to the dollar, the minister said.
It would be a bonus if the currency “works for you” but it should be factored in if it “works against you,” she said during a “Seminar on Business Opportunities in Malaysia” attended by over 300 French businessmen in the French capital Thursday. .
“You have to learn (that) you cannot profit by currency speculation or currency fluctuation. You have to profit because of business operations,” said Rafidah, who is leading a trade mission to Paris, Frankfurt and Zurich.
The minister’s remarks come just as Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz hinted in a media interview in Washington earlier this week that the ban on offshore ringgit might be scrapped.
Malaysia’s biggest fear with the flotation of the ringgit was speculation activities, as was the case before the 1997/98 Asian financial crisis whe unscrupulous hedge funds attacked the Thai baht in July 1997.
This precipitated the crisis which led to Malaysia imposing capital controls including banning offshore trading of the ringgit and pegging it against the dollar at 3.80.
The peg was lifted in July 21, 2005. The ringgit is currently on an uptrend and trading at 3.34 to the greenback.
“Our biggest fear is once we float the currency again, then speculation would be coming in. (There would be) buying and selling of the ringgit, so much so that it won’t be trading in the product but trading in money.”
“Currency is about facilitating trading, currency is about paying for imports and exports. Once currency becomes a commodity, it moves away from its original function,” she said.
Source= Bernama |
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Last Updated ( Sunday, 28 October 2007 )
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