This article first appeared in The Edge Financial Daily on May 18, 2018

KUALA LUMPUR: Bank Negara Malaysia (BNM) has exhausted all its investigations into 1Malaysia Development Bhd (1MDB) and will not be reopening the case unless new evidence arises.

“We have taken all the action that we are able to take under the law in relation to this particular entity,” BNM governor Tan Sri Muhammad Ibrahim told reporters at a media briefing yesterday.

“[For] those breaches that are not under our jurisdiction, we have given all the information and data to the relevant government agencies for them to take action over it,” he said.

However, BNM is waiting for more transparent data to be released by the finance ministry, he said.

This information will be used in the case of repatriation of funds from overseas, which Prime Minister Tun Dr Mahathir Mohamad has declared will be an effort for his administration to undertake.

Muhammad clarified that it is not the central bank but the Attorney-General’s Chambers that is responsible for getting in touch with foreign authorities over criminal investigations.

The prime minister said six days ago that he would appoint a finance ministry adviser to oversee efforts to recover the money allegedly stolen via 1MDB and transferred into foreign accounts.

BNM in August 2016 closed the 1MDB case after it imposed a fine amounting to some RM115.8 million on the entity for failure to fully comply with directions issued under the Financial Services Act 2013.

This included the requirements for 1MDB to repatriate monies remitted abroad following the revocations of the three permissions granted by the central bank. It also included a requirement to submit evidence and documentation specified by BNM.

However, the central bank does not have the legislative powers to investigate fraud, tax evasion, corruption, cheating and criminal breach of trust, or to prosecute.

Ringgit reflects better economic fundamentals

On the subject of intervening in markets to stabilise the ringgit, Muhammad said BNM would continue adopting similar practices in its ringgit trade going forward as it has in the past.

“If there are any knee-jerk spikes, we will provide discipline [to the foreign exchange market],” said Muhammad.

“The purpose is to make sure that once the market adjusts to a particular level, it will adjust in a very smooth manner,” he said.

“Everyday, we announce to the market how much liquidity will be mopped up and how much will be left. We are very transparent,” he told reporters at a media briefing yesterday.

The central bank would continue to focus on strengthening and deepening financial markets, keeping them open and liquid, Muhammad said.

“There are a lot of noises in the short term, but the ringgit should reflect economic fundamentals in the medium to long term,” he said.

Muhammad said the strengthening of the ringgit from 4.3235 against the US dollar a year ago proves that the local currency is better reflecting the country’s economic fundamentals.

“The current level shows that our economic fundamentals remain intact, and we are sure that they will remain intact going forward,” he said.

Yesterday, the ringgit depreciated by 0.14 sen or 0.04% to 3.9697 against the US dollar, its weakest since Jan 12. The ringgit has been weakening since early April from a two-and-a-half-year high of 3.8620 against the greenback.

On Tuesday, the Financial Monetary Committee said Malaysia’s onshore financial markets have remained stable and orderly following the 14th general election (GE14).

It highlighted in its statement that the ringgit traded close to its last traded price of 3.9497 against the US dollar prior to GE14.

UOB Global Economics and Markets Research senior economist Julia Goh said the ringgit is likely to consolidate around prevailing levels due to underlying strength of the US dollar and initial uncertainties over domestic policy reforms.

“However, with greater clarity and a favourable domestic macroeconomic backdrop, the ringgit is expected to gradually strengthen,” she said in a note yesterday.

The research house projects the ringgit to trade at 3.95 against the US dollar in the third quarter before improving to 3.90 in the fourth quarter of 2018.