Saturday March 16, 2013
Singapore banks likely to drop ringgit reference rate
SINGAPORE: Banks in Singapore will likely abandon their reference rate for the ringgit, a person with knowledge of the matter said, handing a victory to Bank Negara as it seeks to control and deepen its onshore 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, was 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.
A spokesman for the Association of Banks in Singapore declined to comment on the matter. The Monetary Authority of Singapore provided no comment. Bank Negara also declined to comment.
No final decision had been made on whether to discontinue the offshore ringgit rate and discussions were continuing about how to reform the system, several banking sources 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 over-the-counter derivatives.
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. - Reuters