KUALA LUMPUR: A total of US$2.2 billion (RM9.74 billion) of export proceeds was converted into ringgit in the first two month of 2017 under the new foreign exchange measures, which will continue to support the ringgit performance, said Bank Negara Malaysia governor Datuk Muhammad Ibrahim.
This compares with US$8.5 billion and US$500 million net being retained in the greenback in 2015 and 2016, respectively.
Effective last December, businesses are required to convert 75% of their export proceeds into ringgit in a move aimed at supporting the local currency.
“As the December measures come into effect, more US dollars will be available to the domestic market as exporters convert their US dollars into ringgit. We expect the number to be positive in the next three months,” Muhammad said.
He said he does not see any reason to make changes to the new forex rules as they have started to pay off. “This measure will be permanent until we think it should be changed,” he opined.
On complaints about rising costs of doing business due to the export proceeds conversion rule, Muhammad is of the view that higher expenses in business operations are because of the instability of the ringgit.
“If the ringgit stabilises, then the cost will go down. Secondly, we’ll make it flexible by allowing a longer period of hedging,” he explained.
Muhammad noted that the volatility level of the ringgit has been reduced by 50%, from the previous 10% to 12% to the current 5% to 6%.
He said Bank Negara will introduce new measures to make it easier for businesses to hedge the forex exposure.
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