KUALA LUMPUR (Aug 7): Malaysia and China have expanded their bilateral local currency swap agreement for five years.

The arrangement would allow the two country’s central banks to exchange local currencies of up to RM130 billion or 220 billion Chinese yuan, up from RM110 billion or 180 billion Chinese yuan previously, according to a Friday statement from Bank Negara Malaysia (BNM).

“The renewal and expansion of the arrangement reaffirm the long-standing cooperation between both central banks,” BNM said.

The agreement has been renewed for the fifth time since it was established in 2009 with an initial size of RM40 billion or RMB80 billion.

China has been Malaysia’s biggest trading partner for more than a decade while Malaysia is China's second largest trading partner in Asean.

“The arrangement facilitates the use of local currencies for the settlement of bilateral trade and investment between Malaysia and China, strengthens economic and financial linkages, and contributes to the resilience of regional financial stability,” BNM added.