The United States Department of the Treasury and Bank Negara Malaysia have announced their intention to maintain close consultations on macroeconomic and foreign exchange issues. Both parties reaffirmed their commitment under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system for balance of payments adjustments or to gain an unfair competitive advantage.
They also agreed that any macroprudential or capital flow measures would not be used to target exchange rates for competitive purposes. Government investment vehicles, such as pension funds, will invest abroad for risk-adjusted returns and diversification, rather than influencing exchange rates competitively. Additionally, both organizations stated that interventions in foreign exchange markets should only occur to address excessive volatility or disorderly movements in exchange rates, whether those involve depreciation or appreciation.
The statement emphasized the importance of transparent policies regarding exchange rates. Bank Negara Malaysia committed to publicly disclose net purchases and sales of foreign exchange on an aggregated basis over a 12-month period every six months, specifically at the end of March and September each year. The central bank will also continue monthly publication of data on foreign exchange reserves and forward positions following the IMF’s Data Template on International Reserves and Foreign Currency Liquidity.
As part of ongoing cooperation between the two institutions, Bank Negara Malaysia will provide bilateral disclosure to the U.S. Treasury regarding net purchases and sales in the foreign exchange market over a six-month period with a three-month lag. This information will remain confidential unless BNM agrees otherwise.
“The United States and Malaysia reaffirmed that they have undertaken under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”
