Bank Negara changes forex administration policies

KUALA LUMPUR: Bank Negara Malaysia (BNM) has changed some of its foreign exchange administration (FEA) policies with an aim of facilitating operational efficiencies and risk management for businesses and financial institutions.
The central bank governor Datuk Nor Shamsiah Yunus said in a press conference on Friday that the bank is committed to reviewing the FEA policies from time to time in accordance to the change in global and domestic conditions.
The changes, which are effective immediately, are in view of allowing businesses greater flexibility in managing their activities in times of uncertainty, said Shamsiah. She added that BNM’s core objective is to maintain and preserve financial stability.
Exporters are now allowed to automatically sweep foreign currency export proceeds into foreign currency accounts upon establishing their six months' foreign currency obligations with their respective onshore banks.
Previously, Shamsiah noted that the exporters are subjected to convert and reconvert requirement.
Residents are also now provided with the flexibility to hedge upon application to the bank, foreign currency obligations beyond six months and foreign currency exposures arising from invoices issued in foreign currency under international pricing practices for domestic trade in goods and services.
“Non-resident corporations are allowed to trade in ringgit-denominated interest rate derivatives via the Appointed Overseas Offices (AOO), subject to back-to-back arrangements with onshore banks. This aims to further deepen the onshore market for interest rate derivatives to support risk management by businesses,” said BNM.
This will allow wider access for non-residents to the onshore financial products as the non-residents are able to trade in ringgit interest rate derivatives via AOO.