BNM - Liberalisation of the Foreign Exchange Administration Rules

Liberalisation of the Foreign Exchange Administration Rules

As part of Bank Negara Malaysia's continued effort to enhance flexibility of the economy, the Bank wishes to announce the further liberalisation of administrative rules on foreign exchange transactions. This aims to promote greater efficiency in the conduct of international trade and a conducive business environment in Malaysia so as to strengthen the linkages with the regional and global economies.

With immediate effect, the following rules are liberalised:-

(i) A resident is able to undertake settlement of international trade in goods and services with a non-resident in ringgit, in addition to settlement using foreign currencies. Exporters and importers are therefore, free to determine the currency of settlement for international trade in goods and services which will facilitate the management of currency mismatches and reduce currency conversion costs.

All settlements in ringgit by a non-resident will need to be conducted through the non-resident's ringgit account maintained with licensed onshore banks.Non-residents can convert and hedge foreign currency into ringgit with licensed onshore banks or with the appointed overseas branches of banking groups of the licensed onshore banks.

(ii) A resident company is now free to borrow any amount in foreign currency from its non-resident non-bank related company, in addition to its non-resident non-bank parent company. Thus, all limits on cross-border foreign currency inter-company borrowings are abolished. This is to provide greater flexibility on sources of competitive financing for the real sector as well as to enhance the management of financial resources within the corporate group.

(iii) The limit on anticipatory hedging for current account transactions with licensed onshore banks is also abolished to facilitate more effective risk management by residents. With this liberalisation, there will be no threshold limits on hedging for current account transactions by residents with the licensed onshore banks.

Detailed information on the foreign exchange administration liberalisation can be obtained at http://www.bnm.gov.my/fxadmin. For further information and enquiries, please contact the BNMTELELINK as follows:
Telephone : 1 300 88 5465
Facsimile : (603) 2174 1515
Email : bnmtelelink@bnm.gov.my

Bank Negara Malaysia
18 August 2010