KUALA LUMPUR: Bank Negara Malaysia (BNM) will continue its efforts to promote two-way flows and deepen Malaysia’s onshore financial market through the measured liberalisation of its foreign exchange policy (FEP) framework, while safeguarding Malaysia’s financial and macroeconomic stability.
BNM Governor Datuk Seri Abdul Rasheed Ghaffour said the central bank remains committed to strengthening the vibrancy, liquidity and efficiency of the domestic financial market through a combination of market development initiatives, sustained engagement with market participants and carefully calibrated policy enhancements, including the FEP framework.
In an exclusive interview with Bernama, the BNM governor said Malaysia has progressively liberalised its FEP framework over the years, providing residents and foreign investors with significant flexibility to undertake cross-border transactions and move capital, while maintaining prudent safeguards against risks from external borrowings and capital flows.
"We have progressively liberalised the FEP framework over the years, including flexibility for exporters to manage their export proceeds. We adopt a measured, gradual, and phased approach to balance greater flexibility for businesses with the need to preserve financial stability,” he said.
Abdul Rasheed highlighted that Malaysia’s FEP framework has been seen as progressively liberal, noting that resident investors without domestic ringgit borrowing are generally free to invest overseas without limits, while foreign investors can transfer funds freely for their investment and returns in line with international norms.
He said that for resident investors with domestic ringgit borrowing, BNM has continued to adopt a facilitative approach in providing flexibility for overseas investments.
"For example, residents can invest overseas for productive purposes with considerable flexibility. Likewise, foreign investors are generally free to repatriate or transfer funds for legitimate purposes,” he said.
The FEP framework and policy measures encouraging repatriation and conversion of overseas investment income have contributed to greater spillover effects on Malaysia’s economy, said Abdul Rasheed.
BNM also oversees offshore foreign currency borrowings by residents, as these borrowings impact Malaysia’s external debt position. This is to ensure borrowers have adequate foreign currency income or appropriate natural hedges to service those obligations.
"So, it is not really about imposing restrictions. Rather, it is a prudent approach to ensure that Malaysia’s external debt remains manageable and that overseas investment ultimately generates benefits for the Malaysian economy,” said Abdul Rasheed.
He emphasised that BNM remained open to further liberalisation where appropriate, with future enhancements to the FEP framework continuing to be informed through close engagement with businesses and market participants.
The central bank has engaged with more than 200 companies in recent years, including exporters and importers, to better understand operational challenges and identify areas where existing processes could be streamlined without compromising financial stability.
"Eligible companies with a strong track record may register as Qualified Resident Investor (QRI), giving them greater flexibility in managing and redeploying funds internationally,” said Abdul Rasheed.
The QRI programme allows eligible resident corporates that repatriate and convert foreign currency into ringgit the flexibility to seamlessly reconvert and reinvest those funds abroad without needing prior approval from BNM for each transaction.
He said the central bank would continue to partner with market participants to facilitate legitimate business needs while ensuring that any future liberalisation remains consistent with preserving financial resilience and protecting the country’s long-term economic interests.
Abdul Rasheed said healthy two-way activity and sustained foreign and domestic investor participation have also supported robust intermediation in the onshore market, with average daily foreign exchange turnover rising to US$21.4 billion as at June 2026, from US$19.8 billion in 2025 (US$1=RM4.09).
On the ringgit, Abdul Rasheed noted that although the ringgit weakened following the West Asia conflict, it continued to be among the region’s better-performing currencies. - Bernama
