KUALA LUMPUR, April 30 (NNN-BERNAMA) – Bank Negara Malaysia has announced a further refinement in the foreign exchange policy aimed at improving business efficiency and providing flexibility for corporates to better manage their foreign exchange risk exposure.
There are five measures altogether which are effective immediately.
The first refinement in policy is an exemption from the requirement for resident exporters to convert export proceeds below RM200,000 per transaction into ringgit.
“This flexibility will alleviate the administrative burden for exporters, particularly SMEs, to meet their foreign currency (FC) obligations,” the central bank said in a statement.
The second measure is that residents are free to hedge foreign currency loan obligations up to the underlying tenure.
Previously, residents could hedge their foreign currency loan obligations up to 12 months only. This flexibility enables residents to better manage their FX risk arising from longer-term foreign currency loan exposure.
“The third refinement in the policy is all entities are allowed to unwind their forward positions in managing their hedging costs except for portfolio investment in response to the changing market conditions. Previously, residents and non-residents needed to seek the Bank’s approval to unwind hedging positions.
“Residents are also free to obtain financial guarantee from non-residents. Before this, they could only obtain financial guarantees up to an aggregate limit of RM100 million,” BNM said, noting that removal of the limit enables foreign investors to better support their entities operating in Malaysia.
As for the fifth measure, residents are free to issue financial guarantee to non-residents with some exceptions from the previous aggregate limit of RM50 million.
— NNN-BERNAMA