The new FX Notices are aimed at improving business efficiency and providing flexibility to individuals and corporates to better manage their foreign exchange risk exposures. The FX Notices apply to all dealings in Malaysian Ringgit and foreign currency, between and amongst Malaysian residents and non-residents. Transactions regulated by FX Notices include the sale, purchase, payment, transfer, remittance, borrowing, lending and guarantees involving Ringgit and foreign currency.
This article seeks to highlight some of the key changes brought about by the new FX Notices. It is not exhaustive. FX Notice 2: Borrowing, Lending and Guarantee A material amendment in the new FX Notice 2 is that a non-bank Malaysian resident may freely extend financial guarantees in favour of non-residents, and obtain financial guarantees from non-residents, other than in two limited circumstances.
The requirements for prior approval and registration of financial guarantees above the threshold of RM50 million or its equivalent in foreign currencies have been removed. Financial guarantees that are issued to secure foreign currency borrowings obtained by a non-resident, where the borrowings will be repaid by a resident other than when the financial guarantees are called upon under the event of default.
With this amendment, the provisions of the new FX Notice 3 are much clearer. One material change for FX Notice 3 is in Paragraph 2 b , which states that there is no limit in the amount that a Resident Individual, sole proprietorship or General Partnership with Domestic Ringgit Borrowing may invest in a Foreign Currency Asset in the form of real estate outside Malaysia, if the investment is for the purpose of:.
The new FX Notice 4 has express provisions regulating payments and receipts:. The material amendments in the new FX Notice 5 includes:. Previously, the permission referred to only a transfer. Exporters may:. The new FX Notices can be found here. It would be beyond the scope of this article to highlight every change that the new FX Notices have made to the exchange control laws of Malaysia. Different businesses have different foreign exchange requirements and manage their foreign exchange exposures differently.
Hence, the impact of these changes on businesses will be unique to each type of business. For example, foreign currency borrowing limits from non-residents may be irrelevant to a company that sources its foreign currency funding internally or from resident lenders. An exporter that receives export proceeds in foreign currency may be impacted by changes in foreign currency hedging rules differently from an importer that needs to access foreign currency to pay foreign suppliers.
Foreign multi-national corporations with subsidiaries and operations in Malaysia have a substantial presence in the Malaysian economy. Over the years, Malaysia has fine-tuned its exchange control laws to suit the requirements of its economy — tightening the exchange controls in times of economic or currency crisis, and liberalising the controls gradually to support its growing economy. The new FX Notices should give greater certainty for Malaysian businesses that are part of the global economy, and for foreign businesses having substantial dealings with Malaysia.
News Alerts Publications Events. Summary of material changes in the FX Notices Preamble and Interpretation The new Preamble and Interpretation section consolidates technical terms and definitions under the previous FX notices and the various Supplementary FX Notices into one section, for ease of reference.
FX Notice 1: Dealings in Currency, Gold and Other Precious Metals A material change in FX Notice 1 is the flexibility granted to all Malaysian residents to hedge their foreign currency loan obligations up to the underlying tenure of the foreign currency exposure, and cancel hedging positions in response to changing market conditions.
Under the previous FX Notices, this flexibility applied only to resident institutional investors registered with BNM under the hedging framework. In July , the central bank abandoned fixed exchange rate regime in favour of managed floating exchange rate system an hour after China floated its own currency. During this period there was widespread belief that the ringgit was undervalued and that if the peg was removed, the ringgit would appreciate. Central Bank continues to run a negative interest rate differential to USD.
The ringgit has appreciated gradually since the peg was abandoned and as at 28 May , it traded at around RM3. From Wikipedia, the free encyclopedia. For the Moldovan central bank, see National Bank of Moldova. Bank Negara Malaysia. Retrieved 4 December NST Online. Archived from the original on 24 December Retrieved 23 January Outline Index. Central banks.
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