KUALA LUMPUR (March 27): 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, 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-to-medium enterprises (SMEs) with net import obligations can receive payment in foreign currency from resident exporters, effective May 2.
"In recognising SME's limited hedging capabilities, SMEs, which are net importers within the global supply chain of goods and services, are allowed to receive foreign currency payment from resident exporters for their domestic trade in goods and services," it said.
This will be applicable to resident SMEs that purchase goods or services from 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, said BNM.
Frequently Asked Questions
Hedging of foreign currency obligations up to 12 months
Director
Foreign Exchange Administration Department
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Eligible resident SMEs to receive foreign currency payment from resident exporters for domestic trade
*Please refer to the Supplementary Notice (No.5) for more details
All enquiries in relation to the Foreign Exchange Administration rules can be directed via email to [email protected] or via telephone at 1-300-88-5465.