KUALA LUMPUR (Sept 27): The central banks of Malaysia and Indonesia on Friday said they have renewed their bilateral local currency swap agreement for five years.

The swap agreement would allow the two central banks to exchange local currencies with a value of RM24 billion or 82 trillion Indonesian rupiah, Bank Negara Malaysia and Bank Indonesia said in a joint statement.

The agreement reflects the ongoing efforts in central banking cooperation to strengthen both countries’ resilience while also supporting the use of local currencies in trade and investments, the central banks said.

“Given the deepening trade and financial linkages between Malaysia and Indonesia, we are pleased to continue our cooperation with Bank Indonesia with the renewal,” said BNM governor Datuk Seri Abdul Rasheed Ghaffour.

The swap agreement supplements the local currency settlement framework between the two countries, which remains a “key enabler for trade and investment settlements in local currencies,” he said.

The swap agreement between the two central banks was last renewed in 2022 for three years involving up to RM8 billion or 28 trillion Indonesian rupiah after the initial agreement was signed in 2019.

For Bank Indonesia, the enhancement of the swap agreement with BNM represents “the importance of international cooperation as part of policy mix that support key policies, while contribute to the development of local currency in bilateral transactions,” said its governor Perry Warjiyo.

The agreement was signed at a high-level bilateral meeting in Jakarta.

The two central banks also exchanged information and experiences and had a comprehensive policy discussion covering macroeconomic, monetary, and financial development, payment systems and digitalisation, and strategies for advancing Islamic finance.

“The close engagements reflect the long-standing cooperation between the central banks and strong commitment to further strengthen mutually beneficial collaboration between both countries,” the central banks added.