Malaysia further relaxed foreign exchange rules on Wednesday in a bid to woo investors, amid growing competition for investment from other Asian countries. In its annual report, the central bank also reiterated its target of 6.0 percent economic growth this year but appeared to play down expectations of lower interest rates, saying that inflation could flare up again.
The liberalisation measures announced by the central bank follow other moves to unwind controls put in place to shield Malaysia's economy during the 1997/98 Asian financial crisis.
The relaxation "aims to contribute towards providing increased flexibility in undertaking foreign currency business, widening the investor base for ringgit assets and financial products, as well as enhancing business and capital market efficiency," Bank Negara said in the report.
The moves include removing the limits on the net open positions of licensed onshore banks, previously capped at 20 percent of a bank's capital base, and allowing investment banks to do foreign currency business, subject to a review.
Malaysia pegged its ringgit at 3.8 per US dollar as part of the controls during the crisis. The authorities removed the currency peg in 2005 and other controls have also been lifted, but a ban on offshore trade in the ringgit remains.