TWENTY years after the Asian financial crisis, Dr Mahathir Mohamad retains his disdain for the currency speculators who crippled the region, reports Bloomberg today.

“I believe that currency trading should not be a business at all,” the former prime minister told the financial portal.

In 1997, Dr Mahathir lashed out at billionaire hedge fund manager George Soros, calling the latter a “moron” and accusing the currency speculator of impoverishing others to enrich “a group of ultra-rich people”.

Soros made a fortune “shorting” the pound in 1992, pocketing almost US$1 billion then, and retorted that Dr Mahathir’s policies would be a “recipe for disaster”.

At the height of the Asian financial crisis, Dr Mahathir famously rejected an International Monetary Fund bailout and slapped capital controls on the ringgit.

“There’s no point in treating a currency like a commodity, devaluing it artificially and causing a lot of poverty among poor countries,” Dr Mahathir was quoted as saying.

The Asian financial crisis began with a series of currency devaluations, starting with the Thai baht. The ringgit plunged by 35%, reserves dropped and the stock market plummeted.  

On January 7, 1998, the government set up a National Economic Action Council, a high-powered group chaired by the prime minister, to stabilise the economy.

On September 1, 1998, Dr Mahathir announced capital control to stabilise the ringgit and control capital outflows, a move heavily criticised by investors then as it would trap an estimated US$18 billion of foreign capital for at least a year.

Dr Mahathir’s approach worked with Malaysia spared from painful IMF austerity measures. 

“Dr Mahathir read the mindset of the time correctly,” Song Seng Wun, an economist at CIMB Private Banking in Singapore, told Bloomberg. “He understood the psychology, he didn’t give into the fear. He knew that if people lose trust in you, in the central bank, in the ringgit, then you’re gone.”

Dr Mahathir told the portal that domestic political considerations were foremost in the mind when it came to rejecting the IMF and World Bank aid.

His particular concern was interference in pro-Bumiputera policies.

“When we borrow money from them, the condition they often impose is that they have a hand in the management of the economy of the country, including the finances,” Dr Mahathir was quoted as saying. “Affirmative action is not something that the World Bank believes in or promotes.”

Today, Dr Mahathir, however, blames the state of the economy on Prime Minister Najib Razak, accusing the current administration of overburdening the economy by borrowing beyond its means and fostering corruption and financial scandals, such as the 1Malaysia Development Bhd fiasco. – July 6, 2017.