The Forex industry is a huge market, moving billions of Dollars every day between hundreds of thousands of traders. However, it is also a fairly dangerous market for reasons besides the currency volatility and skill gap; its mostly-online presence has made it a seeming gold mine for scammers looking to make a quick profit from unsuspecting traders.
As such, it is imperative that you stay informed regarding how your territory regulates this industry, and even if your country has lax regulations, your broker’s country is also important when it comes to its trustworthiness.
So, in this article, we will go over Malaysia’s regulations and how it has changed recently.
Malaysia As A Nation.
Malaysia is a federal nation that has enjoyed a very fast expansion regarding its economic status in the last decade. In fact, many experts place this growth at around 40%.
When we take that into consideration, we can easily expect such a wealthy industry as Forex to gain popularity, and indeed, this has been the case.
This notable increase in wealth and living standards has rapidly placed Malaysia among the largest emerging economies in the Asian continent, and a promising birthplace for many successful Forex traders.
A Relatively Infant Industry.
It is critical to note how the increased economic growth has been a relatively new phenomenon, so it is consequential that the Forex industry is even newer. Therefore, the Malaysian environment can still be seen as a somewhat menacing environment for traders.
That is not only due to the overall dangers of the market but also because of ill-intentioned people.
You see, such an unknown industry lends itself to unscrupulous entities that may look to earn their living off naive newcomers.
However, while that is easily avoidable by simply staying informed, there is another issue regarding the federal constitution of the states.
As each state makes its own legislation, it may be difficult to keep track of which territory is best for business, and Forex may still be illegal in some states, but this only means that you need to be a bit more aware of the laws.
The Relationship Between the Malaysian Central Bank and Forex.
The central bank in Malaysia is Bank Negara Malaysia, and it is responsible for managing the Ringgit.
This is a very important body to keep track of since central banks are a major influence in Forex, due to how they directly affect their currency’s value.
True to this statement, the Malaysian central bank was a huge player back in the 80s. During Jaffar Hussein’s government, the bank quickly earned a substantial influence regarding the overall direction of the market.
In fact, the bank had to receive a request to stop trading, sent by the chairman of the Federal Reserve after realising how the speculation was influencing the economy; this resulted in a significant sale of its currency reserves until 1994, where it pretty much became insolvent.