Malaysia brings in money control
Yesterday the Central Bank in Kuala Lumpur announced a raft of measures to prevent the international trading and holding of the Malaysian ringgit overseas. Stiff currency controls will apply.
The stock market delivered its verdict by registering a plunge of over 13 per cent in share prices, but the ringgit rose in value by 5.2 per cent.
Prime Minister Mahathir Mohamad said the country could "no longer stay with the so-called free market system." He claimed the move would promote the stability of the economy and encourage foreign investment.
However, many market analysts believe it will discourage overseas investment in Malaysia and make the economy more insular.
On Saturday both the Central Bank governor and his deputy resigned in a move widely interpreted as opposition to the imposition of strict foreign controls.
A number of other Asian countries have looked at the option of taking their currencies out of the international marketplace, effectively bringing them back to their position before the export-led Asian economic boom began in the late 1970s.
Meanwhile in Hong Kong, it appears that the frenzy of government share- buying last Friday left the state with an estimated 3 per cent holding in local blue-chip stocks. The Hong Kong Monetary Authority last night disclosed that its stake in HSBC Holdings is 8.9 per cent, double the stake of Prudential Corp which was previously the largest holder of HSBC stock.
There was some suspicion that the government had re-entered the stock market yesterday, limiting the fall in share prices to just below 3 per cent. However most traders believe that the big buyers were the institutions covering short positions taken last week.
The government's heavy intervention contributed to a downgrade of Hong Kong's currency and loan ratings by Standard and Poor on Monday night. Paul Coughlin, S&P's managing director for public finance in Hong Kong, said that the government activity confirmed "that life is riskier in Hong Kong."
World news in pictures
Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
Plenty of Fish dating site founder pulls 'Intimate Encounters' option to ward off sleazy men
Oklahoma tornado: Rescue effort nears an end as authorities say they are confident there are no bodies or survivors left in the rubble
Video emerges of Pope Francis reportedly performing an exorcism in St Peter’s Square
- 1 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 2 Swedes set up 'ultimate Viking movie'
- 3 After woman sells virginity for $780,000, here are the results of our prostitution survey
- 4 China agrees to impose carbon targets by 2016
- 5 Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.