Ever since the Malaysian ringgit was tied to the US dollar in response to attacks on the currency by money market speculators at the start of the Asian financial crisis, PM Mahathir has consistently defended it.

Key to the peg is the considerable stability it has given to local business in budgeting and forecasting costs and revenues. While shielding Malaysia from the viscitudes of the global free market, and with that some accountability, the peg has brought more positives than negatives during it's 3 years of operation.

However that all changed Friday when Mahathir spooked Malaysian business by suggesting that the peg may have to be lifted if the Yen went below 140 to the US dollar.

The stock market responded by closing the day in the negative after strong gains earlier in the day extending a strong upward trend since the new year.

On the weekend - all back to normal as the PM for keeping eveybody guessing reinforced yet again his support for the peg.

From the IHT: IHT: Yen Rises as Malaysia Seeks Halt to Currency's Fall

NEW YORK The yen regained ground against the dollar Friday after the Malaysian prime minister, Mahathir bin Mohamad, called on Japan to curtail its currency's three-month slide, and said that he might have to scrap the Malaysian currency's peg to the dollar.
.
Mr. Mahathir joined Chinese and South Korean officials in pushing Japan to halt the yen's slide because the drop erodes the competitiveness of their countries' exports.
.
"There's been an increase not only in the quantity but in the forcefulness of comments from China, Malaysia, and Reid, a currency strategist at UBS Warburg. "There's obvious concern in Asia about a weak yen possibly destabilizing economies."
.
Mr. Mahathir said Malaysia's government might review the three-year-old peg of 3.80 ringgit to the dollar if the yen falls beyond ¥140 per dollar or if China ended the yuan's link to the dollar.