Wednesday 31 May 2023
By /
main news image

PUTRAJAYA (Sept 18): Former finance minister Tun Abdul Daim Haji Zainuddin told the Royal Commission of Inquiry (RCI) that he was not aware of any policy changes by Bank Negara Malaysia (BNM) with regards to its approach to foreign exchange (forex) trading after 1985.

"I was not informed by the bank of any changes in policy [regarding forex trading which caused RM9.5 billion losses during the time of the Plaza Accord]. Everything was [kept] secret," said the former finance minister from 1984 to 1991 when testifying at the RCI into the scandal here today.

He added that BNM is "fiercely independent" of the government and should not be instructed on how to handle its trading activities.

"I was not aware of any changes because it was not brought to my attention by the central bank," said Daim, adding that the onus was on BNM to inform the Ministry of any changes in policy.

The Plaza Accord was an agreement made between France, West Germany, US, UK and Japan in September 1985, with the aim of intervening in currency markets to depreciate the US dollar against the Japanese yen and German Deutsche mark.

At a previous RCI hearing, former manager of BNM's Banking Department Tan Sri Nor Mohamed Yakcop had said that the Plaza Accord was "historic" as it was the first time that central bankers agreed to intervene in the currency market and the first time that governments set target foreign exchange rates which were to be achieved through active intervention.

Following this paradigm shift in central banks' approach to forex trading, BNM had allegedly also changed its approach towards forex trading, switching from a conservative approach to more aggressive approach after 1985, a move which was allegedly focused on maximising profit from trading.


      Text Size