RM82.1bil in trade settled in local currencies with key partners, says finance ministry

2026-03-24 - 07:00

The finance ministry said the government and BNM have been actively promoting local currencies for cross-border trade to reduce dependence on the US dollar and minimise exchange rate risks. (Bernama pic) PETALING JAYA: Trade transactions and cross-border investment payments between Malaysia and China, Thailand, and Indonesia in local currencies have seen significant growth over the past 16 years, according to the finance ministry. As of November 2025, a total of RM82.1 billion had been settled in local currencies, comprising RM62.6 billion with China, RM10 billion with Thailand, and RM9.5 billion with Indonesia. By comparison, only RM3.6 billion was settled in 2009: RM0.5 billion with China, RM1.9 billion with Thailand, and RM1.2 billion with Indonesia. The figures were disclosed in a written parliamentary reply to Lim Guan Eng (PH-Bagan), who asked about developing alternatives to the SWIFT international banking system and countries that allow trade settlements in local currencies. The finance ministry said the government and Bank Negara Malaysia (BNM) had been actively promoting local currencies in cross-border trade and investment settlements to reduce reliance on the US dollar and mitigate exposure to exchange rate volatility. Initiatives include direct renminbi-ringgit transactions since 2010, special arrangements with China such as the cross-border collateral and renminbi liquidity facilities, as well as the appointment of Bank of China (Malaysia) as a renminbi clearing bank, it added. “Additionally, BNM has implemented the local currency transaction framework with Thailand since 2016 and Indonesia since 2017,” the ministry said. It said the central bank is also exploring central bank digital currencies through Project Dunbar, which could provide an alternative to SWIFT and existing correspondent bank networks. “The government and BNM will continue to strengthen and diversify channels for trade settlements in local currencies to facilitate trade and investment in local currencies,” it said. SWIFT, or Society for Worldwide Interbank Financial Telecommunication, is a global messaging network used by banks to banks and financial institutions to send secure instructions for cross-border payments. Relying on SWIFT often means converting payments to US dollars first, which can be expensive and slow due to fees and exchange-rate fluctuations.