KUALA LUMPUR (Sept 15): Malaysia and Japan have signed another bilateral swap agreement and agreed to a cooperation to promote the settlement of trade and investment in local currencies.

The third bilateral swap arrangement between Bank Negara Malaysia (BNM) and Bank of Japan will allow a larger swap of up to US$6 billion, according to a joint statement on Tuesday. The agreement is effective Sept 18.

The arrangement will “further deepen financial cooperation between the two countries and enhance regional financial stability”, the central banks said.

The deal, last renewed in September 2023, allows the exchange of Malaysian and Japanese local currencies for US dollars up to US$3 billion. BNM also has the option to swap ringgit for Japanese yen under the same arrangement.

The first bilateral swap arrangement between Malaysia and Japan dates back to October 2001 under regional financial support frameworks.

On Tuesday, BNM and the Ministry of Finance of Japan signed a memorandum to initiate a framework of cooperation to promote the settlement of trade and investment in local currencies.

The memorandum calls for information sharing and periodical discussions between the Malaysian and Japanese authorities which will strengthen bilateral financial cooperation, according to another joint statement.

“The authorities believe that it will positively contribute to closer trade and investment ties between the two countries,” the statement read.