Liberalisation of Foreign Exchange Administration Rules

As part of Bank Negara Malaysia’s continuous effort to enhance the flexibility of the economy, the Bank is pleased to update the MABC members of the following liberalization of foreign exchange administration rules, aimed to achieve greater efficiency in the conduct of international trade, greater flexibility to source for competitive financing and facilitate more effective risk management.

With effect from 18 August 2010, the following rules are liberalized:

(a)  Include ringgit as a currency of settlement for international trade in goods or services between residents and non-residents, in addition to foreign currency.

·         This is to promote local currency settlement of trade to facilitate the management of currency mismatches and reduce currency conversion of exporters and importers.

(b)  Allow resident companies to obtain any amount of foreign currency loans from non-resident non-bank related companies.

·            This will provide greater flexibility for competitive financing and enhance the management of financial resources within the corporate group.

(c)  Abolish the limit on anticipatory hedging of current account transactions by residents with licensed onshore banks.

·            To facilitate more effective risk management by residents

A copy of Bank Negara Malaysia’s circular letter dated 18 August and the frequently asked questions with answers are attached for your information. These documents can also be obtained on the Bank Negara’s website at www.bnm.gov.my