KUALA LUMPUR: There were 105 market participants registered in Bank Negara Malaysia’s dynamic hedging programme as at end-2019, managing a total of US$38 billion in assets.
The programme was first introduced in 2016 to provide an avenue for investors to actively manage their foreign exchange risk exposure onshore.
It was part of Bank Negara’s measures to deepen the Malaysian financial market and improve market access.
The hedging programme was further enhanced last year to cater to the different growing needs of investors.
To this end, Bank Negara opened up participation in the programme to trust banks and global custodians.
The central bank also provided the option for investors to enter into forward contracts to buy the ringgit beyond the current 25 per cent threshold upon approval by Bank Negara.
“These revisions are set to improve investor experience and contribute towards enhancing liquidity in the domestic market,” Bank Negara said in its 2019 Annual Report.
Last year, the central bank announced several other measures to liberalise foreign exchange administration policies. This was aimed at providing greater flexibility for corporates, market participants and investors to better manage their foreign exchange risk exposures.
“These measures have benefitted market participants and corporates, particularly SMEs involved in the global supply chain.
“Since the liberalisation, an estimated 1,200 SMEs have utilised the flexibility to settle domestic trade activities in foreign currency, with total transactions amounting to an equivalent of RM327.6 million,” Bank Negara said.
Source : https://new.nst.com.my/business/2020/04/580865/bank-negaras-hedging-scheme-boosts-businesses-forex-dealings