KUALA LUMPUR (Nikkei Markets) -- Malaysia Friday named Nor Shamsiah Mohd Yunus, who had earlier probed graft allegations at a state-investment fund, as the new governor of the central bank.
Nor Shamsiah, a former deputy governor at Bank Negara Malaysia where she served for three decades until Jun. 2016, was last working with the International Monetary Fund. She will return to helm the central bank for five years starting Jul. 1, the finance ministry said in a statement.
Her appointment was approved by Malaysia's king, the statement added. Under Malaysian law, the central bank governor's appointment needs the monarch's consent.
Nor Shamsiah takes office at a time when investors are shunning emerging markets assets and Malaysia faces heightened volatility following last month's shock election outcome that ended more-than-six-decades of uninterrupted rule by the National Front coalition. Foreigners have taken 4.23 billion ringgit ($1.06 billion) out of Malaysia's share market year-to-date. Foreign holdings was 27.4% of total outstanding government bonds in the first quarter of 2018, according to Bank Negara Malaysia.
"Bank Negara Malaysia will continue to focus on delivering its mandate of maintaining monetary and financial stability," Nor Shamsiah said at a news conference. "I need to... discuss with the staff the situation and what are the priorities going forward."
She was among the few in Malaysia who were probing a money trail from state investment fund 1Malaysia Development Bhd that was under the spotlight for alleged graft.
She was also involved in the financial sector resolution initiatives during the 1997/1998 Asian financial crisis.
"Nor Shamsiah's appointment implies continuity in the direction and conduct of monetary policy," said Nomura Group in a note to investors. "Like Muhammad, she had served under former Governor Zeti Akhtar and was a member of the monetary policy committee."
Nor Shamsiah takes over from Muhammad Ibrahim, who quit earlier this month after completing less than half of his five-year term as the central bank's governor.
Muhammad's resignation announcement came following a media report that Malaysia's previous administration had turned to the central bank to pay off some debts owed by 1MDB.
Proceeds from a land purchase by the central bank went into a special-purpose vehicle established by the finance ministry as the deadline on one of 1MDB's debt repayments neared. Muhammad has said he resigned to protect the central bank's image and reputation following the report of land purchase.
Since nonagenarian Mahathir Mohamad led the opposition coalition to last month's election victory - helped in part by voters' simmering anger over alleged graft at 1MDB - several top public officers have resigned.
Mahathir has reopened probes into the debt straddled fund and reinstated former investigators to unearth any wrongdoing. He has replaced the attorney general, the anti-graft commission head and several senior government officials who were soft in dealing with the graft-tainted agency. Former Prime Minister Najib Razak, who was also the finance minister, has consistently denied any wrongdoing.