We could con­sider ren­minbi-ring­git frame­work: BNM

The Sun (Malaysia) - - SUNBIZ -

KUALA LUMPUR: Malaysia could con­sider a frame­work for the ren­minbi-ring­git cross cur­rency mar­ket as it looks to boost the use of the Chi­nese cur­rency in its mar­ket, a cen­tral bank of­fi­cial said on Tues­day.

The frame­work will be sim­i­lar to the ex­ist­ing Thai baht-ring­git agree­ment that gave mar­ket mak­ers cer­tain flex­i­bil­i­ties to fa­cil­i­tate do­ing busi­ness, Bank Ne­gara Malaysia assistant gover­nor Ad­nan Zay­lani Mo­hamad Zahid said in a speech posted on the cen­tral bank’s web­site.

“This will en­able the mar­ket-maker banks to play a larger role in en­hanc­ing the ren­minbi FX ac­tiv­i­ties, not only in the spot mar­ket, but also in the ren­minbi for­ward and swap mar­kets, which will re­sult in lower for­eign ex­change trans­ac­tion cost to the real sec­tor,” he said.

The com­ments come dur­ing Malaysian Prime Min­is­ter Datuk Seri Na­jib Ab­dul Razak’s of­fi­cial visit to China this week that aims to take bi­lat­eral re­la­tions to “new highs”.

China is Malaysia’s big­gest trad­ing part­ner, with to­tal trade be­tween them grow­ing by 11.1% last year to RM230.1 bil­lion. China has also been pump­ing funds into Malaysia, in var­i­ous in­dus­tries.

The cen­tral bank is also de­vel­op­ing a frame­work to help Malaysian in­vestors hedge for­eign ex­change ex­po­sures up to a cer­tain limit. The soon-to-be fi­nalised frame­work is spe­cific to the dol­lar-ring­git and ren­minbi-ring­git pairs, Ad­nan said.

Malaysia should also give spe­cial at­ten­tion to ren­minbi trade fi­nanc­ing and look to de­velop more in­vest­ment prod­ucts in ren­minbi, he said. – Reuters

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