Bank Negara: It's a refinement of existing arrangements, not easing of curbs

PETALING JAYA: Bank Negara Malaysia (BNM) yesterday clarified that it has not eased restrictions on the local foreign exchange market, but rather made a “refinement of existing operational arrangements” between the central bank and onshore banks.
BNM was responding to news reports on its measure to allow for some trading of US dollar/ringgit transactions between local banks effective Feb 6, 2017. Local banks can now transact any foreign currencies for up to US$1 million (RM4.4 million).
In a statement, the central bank said the refinement allows onshore banks to utilise export proceeds conversion of less than US$1 million per transaction to meet their clients’ foreign currency requirements without having to refer to BNM, a move that will help facilitate businesses’ banking needs.
“This allows the onshore banks to better manage their conversion operations during the day without compromising on the overall objective of the measures announced on Dec 2, 2016,” it explained.
The central bank had announced several measures in a bid to enhance the liquidity of the forex market and to curb speculative activity on the ringgit, including the liberalisation and deregulation of the onshore ringgit hedging market, streamlining treatment for investment in foreign currency assets as well as incentives and treatment of export proceeds to promote a deeper, more transparent and well-functioning onshore forex market.
The ringgit weakened 0.09% to 4.44 against the US dollar as at 5pm yesterday.