Malaysia to expand local currency use through BRICS cooperation

KUALA LUMPUR: Malaysia aims to enhance the use of local currencies in cross-border trade and investment transactions through BRICS cooperation.

In doing so, Malaysia hopes to reduce transaction costs and foreign exchange risks, said the Finance Ministry.

It said the move also aims to strengthen the country's financial resilience against external shocks while providing businesses with more options for conducting international transactions.

It added that wider use of local currencies could improve the efficiency of foreign exchange exposure management and support the development of regional foreign exchange markets.

"An increase in transactions using regional currencies, including those of BRICS member countries, could also enhance liquidity and support the development of regional foreign exchange markets, thereby providing businesses with more options," the ministry said in the Dewan Rakyat.

It was responding to Tan Sri Abdul Hadi Awang (PN-Marang) on reforms to the international financial system that Malaysia is pursuing through BRICS.

The ministry said Malaysia had also implemented various initiatives with major trading partners, including cooperation with China to facilitate the use of the renminbi and ringgit in bilateral trade.

Malaysia has also implemented the Local Currency Transaction Framework (LCTF) with Indonesia and Thailand.

The ministry said Malaysia would continue to strengthen and improve existing channels and mechanisms to facilitate and expand the use of local currencies in cross-border trade and investment.

However, it noted that the use of major currencies in international trade and finance remained driven by structural factors, including the size of financial markets and their widespread acceptance among businesses and investors.

"Therefore, efforts to expand the use of local currencies must be market-driven, supported by efficient cross-border payment infrastructure and continuous cooperation between countries," it added. — BERNAMA