Malaysia liberalizes forex policy
The new governor of Central Bank of Malaysia Nor Shamsiah Mohd Yunus has initiated action to liberalize the country’s foreign exchange policy and signaled a more conciliatory approach to regulating overseas insurance companies. This is seen as a major shift away from the previous administration’s tough stance on international financial institutions. These actions are likely to reassure those international investors who have been impacted by Malaysia’s aggressive pushback against Chinese investment and those who fear the government will sacrifice market liberalism for more nationalistic policies it wants to adopt. Under the new framework, Malaysian exporters will no longer be required to convert foreign exchange to the Malaysian currency of ringgit and back again as part of honoring obligations in international currency. Overseas companies will now be able to trade in ringgit-denominated interest rate derivatives while Malaysian residents will have more options to hedge foreign currency exposures.