Malaysia's central bank on March 21 announced a slew of new measures to liberalize its foreign exchange rules to attract overseas investors and facilitate trading in the ringgit. The measures will take effect on April 1.
"We started this liberalization as we felt that it will strengthen the domestic financial system," said central Bank Negara governor Zeti Akhtar Aziz at the release of the bank's annual report. "So far we have seen the benefits of our previous liberalization and we've seen also the very orderly implementation," she said.
Under the changes, investment banks in Malaysia will be allowed to undertake foreign currency business. Limits imposed on foreign currency accounts maintained by residents in licensed onshore banks will also be abolished.
The banks will be allowed to appoint overseas branches to facilitate the settlement of any ringgit assets of their non-resident clients. Residents will also be allowed to open and maintain joint foreign currency accounts for any purpose. Previously, they were only allowed to do so for education and overseas employment reasons.
Zeti also said the central bank would consider allowing the ringgit to trade offshore if the move was seen as beneficial to the country.
Malaysia imposed capital controls in 1998 at the height of the Asian financial crisis, only removing its peg of 3.80 to the dollar in July 2005 in favor of a managed float. However, it has yet to lift the ban on trading the ringgit offshore. The ringgit has been trading at nine-year highs against the dollar and has risen by about 9% since the removal of the peg.
Copyright Agence France-Presse, 2007