To elucidate reports that it had loosened the restrictions on domestic foreign exchange (forex) markets, Malaysia’s central bank explained on Wednesday (8 February) that it had only fine-tuned its “existing operational arrangements” with local financial institutions, reported The Sun Daily.
News outlets recently announced that Bank Negara Malaysia (BNM) has permitted domestic banks to exchange ringgit or US dollars among themselves since 6 February. They have also been allowed to transact any foreign currencies at a maximum value of US$1 million (RM4.4 million).
According to BNM, the “refinement of existing operational arrangements” lets onshore banks use export proceeds conversion of up to US$1 million per transaction to fulfil their customers’ foreign currency needs, without having to seek approval from the central bank, a move that will streamline the daily operations of local financial institutions.
“This allows onshore banks to better manage their conversion operations during the day without compromising the overall objective of the measures announced on 2 December 2016,” it explained.
Previously, BNM introduced several rules in an effort to improve the liquidity in the forex market and to deter speculation on the local currency. These include deregulation of the local ringgit hedging market, improving the process for investment in foreign currency assets, as well as offering incentives and enhancing the treatment of export proceeds to foster a more transparent and better functioning domestic forex market.
As of 5pm on 8 February, the ringgit value slid by 0.09 percent to 4.44 against the greenback.
Image sourced from BNM
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
