The 33.9 point plunge in the KLSE CI in this morning trading is in fact the single biggest drop since the 90-point rebound in the KLSE CI on 5th September after the Prime Minister announced reversal of policy which had brought investor confidence in the Malaysian economy to an all-time low.
Although the Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim had clarified in Hong Kong about the South China Sunday Morning Post report quoting Mahathir as saying that Malaysia was to limit forex trading to financing of trade, it is clear the Anwar had not been able to fully restore the flutters in the financial markets caused by the Mahathir remarks and interview.
Anwar’s clarification was that there is absolutely no change in the rules and regulations in foreign exchange trading in Malaysia and that the country remained committed to further liberalisation of its financial services sector.
The question uppermost in the minds of the people is whether the Prime Minister had expected his Hong Kong statements to undermine government’s recent efforts to restore investor confidence after the twin currency and stock market crises, by plunging the KLSE CI and the ringgit value to new lows, and whether such negative impact on both the currency and stock markets had been fully anticipated by the government.
The other question begging for answer is who is really deciding the country’s financial and economic policies in Malaysia.