The United States Department of the Treasury and Bank Negara Malaysia have agreed to continue their close cooperation on macroeconomic and foreign exchange issues. Both parties reaffirmed their commitment under the International Monetary Fund (IMF) Articles of Agreement to avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.
According to a joint statement, “any macroprudential or capital flow measures will not target exchange rates for competitive purposes; other government investment vehicles such as pension funds invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes; and in cases when intervention in foreign exchange markets may be considered, it should be reserved for combatting excess volatility and disorderly movements in exchange rates, with the expectation that this tool would be considered equally appropriate for addressing excessively volatile or disorderly depreciation or appreciation.”
The two institutions emphasized the importance of transparent policies regarding exchange rates. Bank Negara Malaysia has committed to publicly disclose net purchases or sales of foreign currency in the market on an aggregated basis over a 12-month period. This information will be published at the end of March and September each year, covering a rolling six-month period. Additionally, data on foreign exchange reserves and forward positions will be released monthly according to the IMF’s Data Template on International Reserves and Foreign Currency Liquidity.
As part of ongoing collaboration between the Treasury and Bank Negara Malaysia, BNM also agreed to share with the Treasury bilateral disclosures of net purchases or sales of foreign currency over a six-month period with a three-month lag. This information will remain confidential unless BNM agrees otherwise.
