Bank Negara to halt scheme of higher deposit rates for exporters

KUALA LUMPUR: Bank Negara said it will discontinue a special deposit facility for exporters from next year, rolling back a measure that it had introduced last year to stem the currency’s slide against the US dollar.

Last December, the central bank clamped down on offshore ringgit trade and announced measures to boost liquidity and encourage more domestic trade of the ringgit as the currency fell to 13-month lows in the aftermath of Donald Trump’s US presidential election win.

As a sweetener to keep more cash at home, the central bank said all ringgit proceeds from exporters can earn a higher deposit rate of 3.25% annually under the special deposit facility.

The ringgit is among the best performing currencies in the region this year, up around 9.8% against the US dollar so far this year, as the economy registered better-than-expected growth over the past three quarters.

In a letter sent to banks operating locally and seen by Reuters, Bank Negara said the special deposit facility – which facilitated conversion of export proceeds by resident exporters – will end by Dec 31.

Outstanding balances in the deposit facility, however, can continue to earn a return of 3.10% per annum up to March 31 next year, the central bank said in the letter dated Dec 14.

The ringgit closed at 4.0780 yesterday.