By SHAHEERA AZNAM SHAH / Pic By MUHD AMIN NAHARUL

Bank Negara Malaysia (BNM) has liberalised the foreign-exchange (forex) administration framework to enable businesses more flexibility to manage their forex risk.

Businesses are allowed to hedge their foreign financial obligations for more than 12 months.

Small and medium enterprises (SMEs), who are part of the value chain, can now pay for imports in other currencies instead of converting the ringgit from export sales, BNM governor Datuk Nor Shamsiah Mohd Yunus said in Kuala Lumpur yesterday.

“Flexibility for businesses to hedge their foreign currency obligations is extended for 12 months which would facilitate efficient financial planning by businesses.

“The businesses may also obtain approval from the central bank to hedge their foreign currency obligations beyond 12 months,” BNM stated.

The revised framework also includes the ease of payment in foreign currency for SMEs, effective May 2, 2019.

“In recognising SMEs’ limited hedging capabilities, they are allowed to receive foreign currency payment from the exporters for their domestic trade in goods and services, as SMEs are the net importers within the global supply chain of goods and services,” it said.

Previously, the central bank required exporters earning foreign currencies to convert 75% of the amount to ringgit as one of the measures to support the weaker ringgit exchange rate.