US Treasury, Bank Negara Malaysia agree on exchange rate transparency

The U.S. Department of the Treasury and Bank Negara Malaysia announced an agreement to enhance transparency in foreign exchange practices and continue consultations on macroeconomic matters.

Both institutions reaffirmed their commitment under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system to prevent balance of payments adjustment or gain competitive advantages.

The agreement establishes that macroprudential or capital flow measures will not target exchange rates for competitive purposes. Government investment vehicles including pension funds will invest abroad for risk-adjusted returns and diversification rather than to influence exchange rates competitively.

Foreign exchange market intervention will be reserved for combating excess volatility and disorderly exchange rate movements, with equal consideration for addressing volatile depreciation or appreciation.

Bank Negara Malaysia committed to several transparency measures. The central bank will publicly disclose net foreign exchange purchases and sales on an aggregated 12-month basis, published every six months in March and September. Monthly disclosure of foreign exchange reserves data and forward positions will follow the IMF's Data Template on International Reserves and Foreign Currency Liquidity.

Additionally, Bank Negara Malaysia will provide bilateral disclosure to the Treasury of net foreign exchange transactions on a six-month aggregated basis with a three-month lag. This bilateral information will not be shared with other parties without Bank Negara Malaysia's consent.

The statement emphasizes the importance of transparent exchange rate policies and practices as part of the continued collaboration between the two institutions.

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