The Malaysian currency led weekly losses in emerging Asia
with a 2.9 percent slump against the greenback so far this week.
That would be the largest weekly depreciation since late
September last year.
“A dangerous combination of extremes is likely amplifying
movements, as volatility expectations remain elevated, yet
liquidity is extremely weak,” said Stephen Innes, senior FX
trader for FX broker OANDA in Singapore.
“The fire alarm is sounding and I expect a mad dash for the
exits if we break the critical support 4.40-42 levels.”
Malaysia’s central bank demanded foreign banks sign
commitments to stop trading the currency in offshore markets,
Reuters reported on Wednesday, a move the broader market views
as a form of capital controls.
