BNM Forex Scandal

What is Financial Scandal?

Financial scandal can defined as business scandals which arise from intentional manipulation of financial statements with the disclosure of financial misdeeds by trusted executives of corporations or governments. 

Discussion about the financial scandals

Bank Negara Malaysia 

  Scandals that we want to discuss about is the BNM forex scandals. This is one of the biggest scandal in Malaysia, and its took place during Tun Dr Mahathir Mohamad’s administration

  This cases happened in 1987. During that time, BNM forex trading had lost more than  US$10 billion (RM25 billion). In that time, the exchange rate is still between RM2.30 and RM2.50 to the US dollar. 

    From the interview with former BNM assistant governor Datuk Abdul Murad Khalid, we can know that the main reason that causes the huge losses is there were no control and "nobody knew what is happening". 

   According to a Reuters report from the period, BNM in 1989 became increasingly aggressive in its foreign exchange trading, purportedly to stabilize the ringgit.

     Lastly, this cases have rescued by the Ministry of Finance which is Tun Daim Zainuddin. None of the top executives in the Bank Negara Malaysia accused of trading activities as the government fully absorb losses. After that, the Bank Negara Malaysia is not involved in any high-risk business to prevent it recurring.

Sources : https://www.thestar.com.my/business/business-news/2018/06/06/bank-negara-governor-has-submitted-resignation/ 

Published by : Star news 

Above is a video about the resigned of Bank Negara Governor. 

The BNM governor at the time, the late Tan Sri Jaafar Hussein, resigned following the scandal and was blamed for it, but after Murad's revelations, Deputy Home Minister Datuk Nur Jazian Mohamed said his father-in-law had been a scapegoat for "others"

My opinion about the BNM financial scandal

    In my opinion, the main reason that causes this scandal happened is the failure of investment. 

   When this scandals occurred, Malaysia's economy had become very weak and worst. The rate of exchange forex money had drop so much. 

     According to the scandals, the exchange rate during 1988 is 1 USD = RM2.30. But nowadays, the exchange rate had become 1USD = RM 4.09 . 

Exchanges rate nowadays

  We can see that the value of Rinngit Malaysia have drop compare to 1988. Therefore, we must be careful while doing investment. This is because it is also risk when we doing investment. Just like 1988 the investment in forex. 

  

  Investment can give us the opportunity to earn a lots of money. But in other ways, it will also cause us to loss a huge amount of money in a short period of time. 

   Besides of this, I also can see that although our country had loss 30 billion and lead to economic storm, but there is still the ways to solve the problem. So that, we no need to be too upset when we fail on investment.

   In conclusion, government should think carefully before invest and there should always make sure that the investment can at least get back the cost. Therefore, we can avoid the scandals happened again in the future.