Bank Negara has announced that bankers must use the same rate on spot or forward basis entered on the same day when exporters convert 75% of their export earnings to ringgit and to reconvert to US dollars to fund their imports.
Malaysian Rubber Glove Manufacturers Association (Margma) president Denis Low Jau Foo said they have met up with Bank Negara along with other exporters and the central bank took into consideration our deep concerns on needless exposure to currency fluctuation risks.
He told Business Times in an interview that Bank Negara has informed exporters who have open contracts denominated in foreign currencies, including our members, to settle them by end-March 2017.
All this while, Low said Margma members have always converted the bulk of their export earnings into ringgit as they expand their capacity.
“Our investment in capital intensive factories is in ringgit. Most of our production lines are highly automated,” he said.
“Our members pray for a stable currency and policy regime. We are supportive of Bank Negara’s initiative to stabilise the ringgit in the interest of our economy but our concerns are on the implementation methods,” Low added.
In a separate interview, Malaysian Rubber Products Manufacturers Association (MRPMA) president Ong Eng Long concurred with Low.
“This comes as a relief for us, as our members will have until March 2017 for their open contracts to be fulfilled,” Ong said.
“Also, since Bank Negara has now fixed the same-day foreign exchange rate on bankers, our members are shielded from needless currency fluctuation risks,” he added.
Established in 1952, MRPMA membership consists of more than 100 players. Apart from supplying locally, these big, medium and small manufacturers reportedly contribute RM18 billion worth of rubber exports last year.
At the “What you should know about Bank Negara’s new forex measures?” seminar organised by Malaysia External Trade Development Corporation (Matrade) today, close to 500 exporters sought details on Bank Negara’s new policy to strengthen and stabilise the ringgit.
Bank Negara assistant governor Adnan Zaylani Mohamad Zahid, who also chairs the Financial Markets Committee in the central bank told exporters at the seminar those in the services and trading businesses are excluded from this new foreign exchange policy.
“Bank Negara has shown flexibility in incorporating feedback from exporters in implementing this new policy on foreign exchange,” said Matrade chief executive officer Dzulkifli Mahmud.
“We’re suggesting there will be more follow up engagement sessions between the central bank and exporters for the benefit of our economy,” he told reporters in a briefing yesterday.
The central bank had announced on Dec 5, 2016 measures to enhance the liquidity of the foreign exchange market, which some economists have deemed as an appropriate move.