Malaysia is looking to increase local currency trading to reduce its reliance on the US dollar, and China, Indonesia and Thailand have agreed to use the Malaysian currency, the ringgit, in transactions with Malaysia, Prime Minister Anwar Ibrahim said on October 10.
According to Reuters and Malay Mail, Anwar said this was the result of his talks with China and ASEAN countries at the recent ASEAN summit in Jakarta, and that China welcomed the initiative.
"Of China's massive investments worth billions of ringgit, about 20-28% are made in ringgit rather than US dollars. Therefore, the ringgit will not depreciate." "So far, we have successfully conducted trade in local currencies in Indonesia, Thailand and China," he said.
"It will be difficult to completely stop relying on the US dollar, but Malaysia will be more proactive in using the local currency [in trade]." Anwar also mentioned that Malaysia will implement structural reforms that can attract investment and boost the economy, which will boost the local currency.
Anwar said in September that trading in local currencies was not a new thing. He noted that after the economic crisis of the late 1990s, local currency trading had also begun to become part of the international financial architecture.
Kuala Lumpur - The China General Chamber of Commerce (CCCCI) on Tuesday said it hopes Malaysian businesses will make good use of the Malaysia-China bilateral currency swap agreement to settle in renminbi to reduce transaction costs. The Malaysia-China Chamber of Commerce also called for a further increase in the Malaysia-China bilateral currency swap line in the future to promote regional financial stability.
On August 25, during the 10th ASEAN Finance Ministers and Central Bank Governors Meeting in Jakarta, Indonesia, Bank Indonesia signed memorandums of understanding (Mous) with Bank Negara Malaysia and the Bank of Thailand on local currency trading to reduce reliance on the US dollar.
It is reported that Indonesia has previously established local currency settlement cooperation with ASEAN member countries Thailand and Malaysia. The new agreement is an expansion of local currency settlements, which use their respective currencies for trade and direct investment, without the need for companies to use the US dollar as an intermediary.
Peri Wagyo, governor of Indonesia's central bank, said Indonesia and the two countries wanted to use their currencies for more than just trade and investment. As part of the new memorandum of understanding, Indonesia, Malaysia and Thailand have agreed to promote more efficient cross-border payments, and the three countries will also use local currencies to trade financial assets, including government bonds and stocks, Perry said.