KUALA LUMPUR: Money changers should not hoard foreign currencies as this could pose risks in a volatile market, the Malaysian Association of Money Services Businesses (MAMSB) warned as the ringgit hit its lowest in 16 years yesterday.

MAMSB president Ramasamy Veeran said it was never a practice to stockpile and withhold foreign currencies in order to make a profit from the weak ringgit.

“It is not a standard practice or a norm … Further, there are risks associated in stockpiling foreign currencies in a volatile local and global market,” he said.

“The risk would be exchange rate risk whereby if there are adverse changes in currency exchange rates, the money changer could suffer a loss if they are stockpiling foreign currencies.”

Ramasamy’s comments came as the ringgit slid to a 16-year low on July 6, falling to 3.8092 to the US dollar. It was last at this level from 1998 to 2005 during which it was pegged to the US dollar at 3.8 following the Asian financial crisis. This time, the ringgit’s slide comes amid low crude oil prices, as well as allegations against Prime Minister Datuk Seri Najib Razak and state investment firm 1Malaysia Development Bhd.

Ramasamy said MAMSB has yet to receive any complaints about money changers withholding foreign currencies but warned such actions could impact the various sectors of the economy.

“Stockpiling and withholding of foreign currencies can create an artificial shortage of foreign currencies which can impact areas, such as tourism.”

Under its governing rules, MAMSB can act against money changers found to be hoarding foreign currencies in order to make profits due to the ringgit's slump, Ramasamy said.

“Our members have been advised to ensure that all customers are handled in a fair and transparent manner.

“If any complaints are received on this matter, action will be taken in accordance with our governing rules,” he said, adding that the public could lodge complaints at the association's website (www.mamsb.org.my) or with Bank Negara Malaysia. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on July 23, 2015.