Bank Negara, the central bank of Malaysia, has just announced it is relaxing its foreign exchange administration rules to allow domestic institutions and mutual fund portfolios to allocate up to 10% of their assets internationally.
Technically, institutions such as the $56 billion Employee Provident Fund have been allowed to invest offshore, but Bank Negara declined to approve such measures, lest it disrupt the ringgit's fixed rate of MR3.8 to the dollar imposed by former prime minister Mahathir Mohammed in the wake of the Asian financial crisis in 1998.
The central bank's latest annual report indicates it has no intention of ending this pegged exchange rate, but notes the ringgit has...
