Malaysia | Central bank Governor said to have offered to resign

Muhammad Ibrahim

Malaysia’s central bank Governor Muhammad Ibrahim offered to resign from his post two years into his term, according to people familiar with the matter, who declined to be identified because the discussions are confidential.

The move comes less than a month after Prime Minister Mahathir Mohamad won a surprise election victory and his newly installed finance minister, Lim Guan Eng, raised questions about the central bank’s purchase of land from the previous administration.

It’s unclear what the government’s response was to his resignation offer. A spokesperson for the central bank declined yesterday to comment on whether the governor had offered to resign. An official at the Finance Ministry also declined to comment. Muhammad didn’t respond to several calls and text messages to his mobile phone and office.

Lim said in May that the previous administration of Najib Razak had used money raised from a land sale to the central bank – valued at about USD520 million – to pay off some of the debts of 1MDB, the state investment fund that’s been mired in a corruption scandal.

Bank Negara Malaysia has said the purchase was transacted at fair value and complied with all governance requirements and relevant laws.

The ringgit erased earlier gains to trade little changed at 3.9730 per dollar after the report, while the benchmark stock index pared earlier losses of as much as 0.4 percent to close steady at 1,755.14.

“It is still part of the ongoing investigation into the previous government’s alleged corruption,” Andy Ji, Asian currency strategist at Commonwealth Bank of Australia in Singapore, said by phone. “At this stage, it is hard to see the development would lead to a change to monetary policy stance.”

Muhammad was promoted to lead the central bank for a five-year term in May 2016 when Zeti Akhtar Aziz – who was appointed by Mahathir – stepped down after 16 years of leadership. He had risen through the ranks of the central bank since joining it in 1984 and was endorsed by Zeti when she left as a successor able to provide policy stability.

Born in 1960 and with a master’s degree from Harvard University, Muhammad has had to navigate volatile financial markets since he took the helm at Bank Negara Malaysia. He cut interest rates in a surprise move shortly after taking office and implemented curbs on some foreign-exchange trading that has drawn criticism from currency traders.

The economy has rebounded since then, with the currency among the top performers in emerging markets globally this year. Elffie Chew, Anisah Shukry, Bloomberg