Govt, BNM Continue To Strengthen Trade And Investment Mechanisms In Local Currency

KUALA LUMPUR, Feb 27 (Bernama) – The government and Bank Negara Malaysia (BNM) will continue to strengthen and improve existing channels and mechanisms to facilitate trade and investment transactions in the local currency.

The Finance Ministry, in a written reply published on the Parliament’s website on Wednesday, said this initiative will directly support efforts towards ensuring the sustainability and stability of regional financial systems.

“The increased use of local currency in regional trade settlements reflects a growing level of awareness and demand.

“However, the choice of settlement currency remains subject to the commercial decisions of trading companies,” the ministry said in response to Oscar Ling Chan Yew (PH-Sibu), who sought clarification on Malaysia’s efforts to reduce US dollar dependency and the assessment of these efforts effectiveness.

The government and BNM have taken proactive steps to encourage the use of local currencies in cross-border trade and investment settlements.

According to the ministry, the main objective of such measures is to enable more efficient management of foreign exchange risk exposure, thereby strengthening the economy's resilience to external factors.

The government and BNM  have also explored opportunities for local currency settlement with strategic countries such as China since 2009, Thailand since 2016, and Indonesia since 2017, all of which have high bilateral trade values.

“Such initiatives have the potential to improve the efficiency and liquidity of local currency markets and can directly bring bilateral benefits to regional economies,” it said.

-- BERNAMA