KUALA LUMPUR (Nov 11): Bank Negara Malaysia Governor Datuk Muhammad Ibrahim said the central bank had not instructed banks to freeze derivative and spot transactions involving the ringgit to mitigate financial market volatility.
 
Muhammad said if there were any policy changes regarding derivative and spot transactions involving the ringgit, Bank Negara would announce such measures.

"So far there is none. We deal with individual banks. We try to interact with the market to make sure the noises in the market are not too loud," he said at a press conference in conjunction with Bank Negara's announcement on Malaysia's third quarter economic numbers. 

Muhammad was responding to a question on whether Bank Negara had directed banks to freeze derivative and spot transactions, involving the ringgit. 

Bank Negara is against speculative ringgit trades via the non-deliverable forward (NDF) market. Muhammad said the NDF mechanism was not reflective of the ringgit's fundamentals.
 
"The NDF market is speculative positioning. (We) should not take the spot rate from the NDF. Our ringgit must be taken by the underlying transaction as contracted on a daily basis. That's how the ringgit should be determined.

"It is incumbent on the central bank to show its presence in the market to ensure pricing is correctly done, (and that) banks do not price the ringgit out of sync with fundamentals," he said.

On whether Bank Negara intends to peg the ringgit, Ibrahim gave a resolute "no".