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CHRONOLOGY - Ups and downs of Malaysia's currency

Following is a chronology tracing the events preceding and following Malaysia's decision to peg its currency to the U.S. dollar.

1997

Jan 13 - Ringgit hits 17-month high of 2.47 per U.S. dollar on forecasts Malaysia will yield low-risk returns.

July - Rupiah, baht, ringgit and peso slump as confidence in the region deteriorates. Bank Negara intervenes to defend ringgit.

Dec 5 - Government cuts 1998 GDP growth forecast, cuts spending and tightens credit. Ringgit plunges to 3.87 per dollar.

1998

Jan 7 - Ringgit hits all-time low of 4.88

July 24 - Moody's downgrades Malaysia long-term foreign currency ceilings to Baa2 from A2. A day later, S&P cuts long-term foreign currency sovereign ratings to BBB-plus from A-minus.

Aug 16 - Former Prime Minister Dr. Mahathir Mohamad tells Malaysians to prepare for "shocking" economic measures.

Aug 28 - Bank Negara governor and deputy governor resign in a policy split over pending capital controls.

Aug 29 - Mahathir says no plans for capital controls.

Sept 1 - Malaysia imposes foreign exchange controls to contain speculation and restrict capital flows. Allows trading of ringgit only within the country. Foreign investors must keep portfolio investments for one year. Kuala Lumpur Composite Index (KLCI) hits 10-year closing low of 262.70 points.

Sept 2 - Malaysia fixes the ringgit at 3.80 to the dollar.

Sept 14 - Moody's cuts Malaysia's long-term foreign currency rating from Baa2 to Baa3. A day later, S&P cuts long-term foreign currency rating two notches to BBB minus. Sept 28 - Morgan Stanley Capital International (MSCI) removes Malaysia from Emerging Markets Free and All Country Free Indices.

1999

Feb 4 - Malaysia relaxes capital controls, replacing one-year holding rule on portfolio principal with system of levies on principal and profits.

April 22 - Mahathir forecasts five percent GDP growth in 2000.

Aug 9 - Bank Negara cuts three-month intervention rate to 5.5 percent from 6.0 -- the sixth cut since capital controls.

Aug 25 - Malaysia says GDP grew by 4.1 percent in the second quarter, confirming an end to the recession.

2000

May 17 - Morgan Stanley Capital International (MSCI) says it is returning Malaysia to benchmark indices, citing the country's partial withdrawal of capital controls.

2002

Jan 11 - Former Prime Minister Mahathir says Malaysia will review the peg if further weakening of Japanese yen forces China to devalue. The yen had fallen 10 percent against the dollar in two months.

Aug 20 - Standard & Poor's Ratings Services says fixed exchange rate is sustainable for now and predicts timing of any decision to abandon the peg will be political rather than economic.

2003

March 26 - Central bank announces steps to relax exchange controls to make life easier for exporters and foreign-controlled firms: residents can sell forward up to 12 months foreign currency receivables for ringgit; export foreign currency account overnight limit for approved operational headquarters is raised.

June 17 - Government says Malaysia to keep ringgit pegged but asks firms and government agencies to build up revenue streams in euros to limit currency risks.

2004

Feb 13 - Second Finance Minister Nor Mohamed Yakcop says a 20 percent move against regional currencies would trigger a review of ringgit's peg to the dollar.

Feb 20 - Finance ministry confirms reported comments by Nor Mohamed that Malaysia would seriously consider reviewing its peg of 3.80 ringgit per dollar if the U.S. currency fell to 1.40 per euro and below 100 yen.

Nov 2 - Central bank governor Zeti Akhtar Aziz says ringgit, still pegged at 3.80 per dollar, is close to fair value. But government bond prices firm on speculation of a revaluation.

2005

May 25 - Malaysia says any action taken by China to reform the yuan would be critical in determining any policy change on the ringgit.

June 17 - Second Finance Minister Nor Mohamed Yakcop says ringgit peg "not cast in stone".

July 7 - Prime Minister and Finance Minister Abdullah Ahmad Badawi says Malaysia and China are not working together to coordinate a shift in their exchange regimes.

July 21 - Malaysia drops policy of fixing currency to the U.S. dollar and moves instead to a managed float of the ringgit, tying it to a basket of currencies.

Source: Reuters

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