Bank Negara takes measures to strengthen the ringgit

According to media reports, Malaysia’s Bank Negara has taken some measures to strengthen the ringgit against the US dollar. Accordingly, exporters have to convert 75% of their earnings into ringgit after they bring their money to the country as of Monday. That is to say, companies will not be allowed to hold their export income in US dollar at local banks. In an attempt to provide some incentives as a compensation, the Bank also reported that these companies will earn a special deposit rate of 3.25% annually in return. This conversion is expected to increase Bank Negara’s reserves by more than $18 billion, the reports revealed.

The second measure the Bank has taken is to limit the local or foreign investments of companies and individuals in foreign currencies, the media reports indicated. As of Monday, local companies will reportedly be allowed to invest up to RM50 million and individuals RM1 million in foreign currency in the domestic market.

The data showed that these measures proved effective as the ringgit strengthened against the US dollar in the offshore market for the first time after weeks and closed at RM4.44 yesterday evening.