Malaysia is looking to expand the use of local currencies in international trade and investment transactions through cooperation with BRICS member countries.
The Ministry of Finance (MOF) said the initiative aims to reduce transaction costs and foreign exchange risks while strengthening Malaysia’s financial resilience against external economic shocks.
Deeper Explanation:
The initiative includes:
- Encouraging the use of ringgit and other regional currencies for international transactions.
- Strengthening cooperation with China to facilitate renminbi and ringgit transactions.
- Expanding the Local Currency Transaction Framework (LCTF) with Indonesia and Thailand.
- Improving regional foreign exchange market liquidity.
- Strengthening cross-border payment infrastructure.
The government believes that businesses should have more options when conducting international transactions instead of relying heavily on major global currencies.
Business Impact:
- Companies involved in international trade may have more currency settlement options.
- Businesses could reduce exposure to foreign exchange fluctuations.
- Importers and exporters may benefit from lower currency conversion costs.
- SMEs conducting regional trade may gain greater flexibility in managing international payments.
Economic Impact:
- Strengthens Malaysia’s financial independence.
- Encourages regional trade and investment cooperation.
- Reduces certain risks associated with currency volatility.
- Supports stronger financial integration among regional economies.