KUALA LUMPUR: Bank Negara Malaysia (BNM) has announced further liberalisation of the foreign exchange administration (FEA) policy with new measures effective Aug 30, 2019 aimed at providing greater flexibility and efficiency for businesses to manage their foreign exchange risk and conduct their daily operations.
Firstly, residents can hedge their foreign currency current account obligations up to their underlying tenure, compared with up to 12 months previously.
Secondly, resident treasury centres can hedge on behalf of their related entities, while non-resident treasury centres can hedge on behalf of their related entities upon a one-time registration with BNM, compared with required approval previously.
Thirdly, non-residents can hedge on anticipatory basis, compared with required approval previously.
Fourthly, BNM has revised the definition of domestic ringgit borrowing by exempting credit facilities for miscellaneous expenses.
On another note, governor Datuk Nor Shamsiah Mohd Yunus said BNM has had “positive engagements” with global index provider FTSE Russell.
“They (FTSE Russell) were appreciative of the measures we’ve put in place to deepen the onshore market,“ she told reporters after announcing the second quarter’s gross domestic product growth last Friday.
She said the new measures seek to deepen the onshore foreign exchange market to provide investors the flexibility to undertake hedging.
In April, FTSE Russell said it may drop Malaysian debt from the FTSE World Government Bond Index due to concern about market liquidity. The review is due in September.