This article first appeared in The Edge Financial Daily on March 28, 2019

KUALA LUMPUR: Bank Negara Malaysia (BNM) has announced a further liberalisation in the foreign exchange administration (FEA) framework to provide greater hedging flexibility for residents to better manage their foreign exchange (forex) risk.

In a statement yesterday, the central bank said residents can now hedge their foreign currency obligations for a longer tenure of 12 months, compared with six months previously, effective immediately.

Residents may also obtain approval from BNM to hedge their obligations beyond 12 months.

These foreign currency obligations include current account obligations such as import of goods and services, as well as distribution of profits, dividends and interests payable, and loan repayments.

Meanwhile, small and medium enterprises (SMEs) with net import obligations can receive payment in foreign currency from resident exporters, effective May 2.

This will be applicable to resident SMEs that buy goods or services overseas, which will support the production and distribution of goods by another resident exporter for export activities. Eligible SMEs may apply to their banks to set up this facility to receive foreign currency payments for their domestic trade with resident exporters, it said.