Mon, Jan 24, 2005 - Page 10 News List

Speculators pinning hopes on Malaysian review of currency

AFP , Kuala Lumpur

Speculators are betting that Malaysia will bow to growing pressure to review its currency peg to the shrinking US dollar, and many analysts believe that not only are they right but the government should make a change soon.

Foreign cash has been pouring into Malaysia, hiking its foreign reserves by 19 percent or US$10.7 billion in the fourth quarter of last year alone, Barclays Capital noted in a research paper on Friday.

Comments by economists and even the man who imposed the peg -- former premier Mahathir Mohamad -- that the time is right for change "are likely to accelerate such speculative inflows," Barclays Capital said.

It forecast a change in the pegged rate of 3.80 to the US dollar -- in place since 1998 -- around mid-year.

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