NST Online Business Times : latest
NST Online Business Times : latest |
| Singapore banks drop ringgit reference rate? Posted: 14 Mar 2013 06:58 PM PDT SINGAPORE: Banks in Singapore will likely abandon their reference rate for the Malaysian ringgit, a person with knowledge of the matter told Reuters, handing a victory to Malaysia's central bank as it seeks greater control over its currency market. Singapore's foreign exchange market has come under pressure for change since regulators, spurred by a global scandal over bankers rigging key lending rates, ordered reviews last autumn into various rates set by the city-state's banking association. The probes uncovered attempts by traders to manipulate Singapore's rate fixings for certain currencies, fuelling the ire of central bankers in Malaysia and Indonesia who for years have held concerns about the impact of offshore speculation on their own spot currency markets. The Association of Banks in Singapore, which is hammering out reforms to improve the integrity of its rate settings, is expected to adopt a plan that would end the daily publication of a ringgit spot price for settling derivative contracts, said the person, a banking professional with direct knowledge of the plans who did not want to be named as the plans were not public. No final decision has been made on whether to discontinue the offshore ringgit rate and discussions are continuing about how to reform the system, several banking sources involved in the process have told Reuters. Even the consideration of dropping the offshore ringgit rate shows the pressure Singapore faces from its neighbours and the impact of the global regulatory push for greater transparency in The association has not shown any movement toward ending Singapore's rate fixing for the Indonesian rupiah, which market players say lacks a reliable spot reference rate in its home country compared with Malaysia's reference rate for the ringgit. Over the past two years, the Singapore fixing has consistently quoted the rupiah at rates against the dollar that are weaker than the onshore rates, with the spread widening as far as 250 rupiah at the start of this year. The spread between onshore and offshore rates for the ringgit fixing is usually close to zero. The derivatives priced against the reference rates, known as non-deliverable forwards (NDFs), are instrumental for companies, investors and traders seeking to hedge currency risk in countries where capital controls restrict foreign money flows. With the end of Singapore's ringgit rate, banks trading ringgit NDFs would refer to a benchmark published by the foreign exchange industry association in Malaysia, the person said. That would still fall short of the ideal solution - a benchmark based on actual transactions - but it would be better than the offshore model, said Joseph Cherian, director of the Centre for Asset Management Research & Investments at NUS Business School in Singapore. "When vested interests like offshore bankers set reference rates, be it interest or foreign exchange, and have their profit and loss - and by extension, their compensation - determined by the very rates they set, the temptation to do wrong is always high," he said. Singapore's NDF market is one of the world's largest with turnover that can reach billions of dollars per day. Most trade is in the Indian rupee, for which reference rates are overseen by India's central bank, and in Southeast Asian currencies. Some central banks, including Indonesia's, have long complained that speculation by NDF traders has made the spot rates for their currencies more volatile. To determine Singapore's daily currency reference rates for the ringgit, a panel of 15 banks submits estimates of onshore spot rates every trading day. The fixing takes the average of bank Thomson Reuters, parent of Reuters news, acts as the agent for the Association of Banks in Singapore, collecting and calculating the rates. A similar process is used for interbank lending rates in Singapore and other financial centres around the world. The move to a locally set rate is both a vote of confidence in the credibility of Malaysia's onshore rates, and a signal of banks' reluctance to remain involved in an offshore rate-setting It also reflects momentum for regulators to crack down on rate fixing systems after last year's scandal over the setting of the benchmark London interbank offered rate (Libor), which found traders worldwide were manipulating daily lending rates tied to more than US$600 trillion worth of securities. The review into Libor in London is proposing to reduce the number of interest rate benchmarks and tighten the oversight of the rate-setting process.-- Reuters |
| KL shares open mixed in early trading Posted: 14 Mar 2013 07:03 PM PDT Share prices were mixed in early trading Friday after two days of losses on renewed buying interest in lower liners, dealers said. At 9.15am, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.91 of a point to 1,639.83. It had opened 0.61 of a point better at 1,641.35. HwangDBS Vickers Research Sdn Bhd said the bellwether FBM KLCI could extend its recovery after bouncing up from a trough of 1,635.87 yesterday. "For the time being, we expect the benchmark index to swing between its immediate support and resistance levels of 1,635 and 1,655, respectively," HwangDBS said in a research note today.
"As such, Asian equities will probably show a positive bias when trading resumes today," the research firm said. Meanwhile, the Plantation Index lost 13.46 points to 7,896.8, the Industrial Index fell 10.08 points to 2,815.48 while the Finance Index dwindled 12.54 points to 15,277.51. The FBM Emas Index declined 3.97 points to 11,219.51, the FBMT100 shed 5.52 points to 11,059.37, the FBM Mid 70 Index went down 3.15 points to 12,463.48 and the FBM Ace Index slid 10.03 points to 3,963.21. Gainers outnumbered losers 89 to 63, with 103 counters unchanged, 1,387 untraded and 20 others suspended. Turnover stood at 54.34 million shares worth RM35.21 million. Among actives, Luster Industries and MNC Wireless earned half sen each to 10.5 sen and 11 sen, respectively, Sanichi Technology added one sen to 12.5 sen, while Censof Holdings eased half sen to 43 sen. Heavyweights, Maybank rose four sen to RM9.25, CIMB slipped two sen to RM7.07, while Sime Darby and Axiata were flat at RM9.19 and RM6.39, respectively.-- Bernama |
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