BNM Policies Are In The Best Interest Of The Country, Economy

By Saraswathi Muniappan KUALA LUMPUR, Dec 8 (Bernama) -- Bank Negara Malaysia's (BNM or Malaysia's Central Bank) policies have always been in the best interest of the country and it is not uncommon to assess and realign policies periodically to ensure that the economy is well served. In this connection, recent measures to develop the onshore financial market and stabilise the ringgit is aimed at providing a better operating environment for all sectors of the economy, as well as, for members of the public who have foreign currency obligations such as for education and loans repayments, it said. "As we navigate to implement measures to make the onshore foreign exchange market more efficient, open and transparent, we highly value exporters' support in contributing to the stability of the financial market and the overall economy," the central bank told Bernama, in a written reply, when asked about exporters reaction to the recent measures that took effect on Dec 5. To meet exporters needs, BNM was currently engaging with affected parties to gather feedback and arrangements are currently being made to smoothen the relevant administrative processes, it added. Among the measures that took effect on Monday include allowing exporters to retain only up to 25 per cent of export proceeds in foreign currency and the remaining 75 per cent in ringgit. Other measures taken were to allow residents, including resident fund managers, to freely and actively hedge their US Dollars and Chinese Renminbi with an exposure of up to a limit of US$1.35 million (RM6 million) per client per bank. Residents with domestic ringgit borrowing, are free to invest in foreign currency assets, both onshore and abroad, up to the prudential limit of US$11.29 million (RM50 million) for corporates and US$225,614 (RM1 million) for individuals. Explaining further, BNM said Malaysia had accumulated a trade surplus of more than US$225.55 billion (RM1 trillion) since 2006. "Between 2006 and 2010, 28 per cent of the accumulated surplus was converted into ringgit, but this has declined to 1 per cent in the past five years leading to severe imbalance in the onshore forex market. "This has contributed to significant volatility in the ringgit's exchange rate which is affecting the entire economy," it said. Hence, the recent measures to develop the onshore financial market are intended to achieve this objective. --BERNAMA