4 banks named for baht-ringgit clearing
Four banks - two each in Thailand and Malaysia - are named to be clearing agents for the settlements in trade between the two countries.
The agreement is expected to be signed within this quarter to establish the baht-ringgit clearinghouses in both countries. Bangkok Bank and Kasikornbank will be the clearing agents in Thailand, while CIMB and Maybank will be the clearing agents in Malaysia.
Tongurai Limpiti, deputy governor of the Bank of Thailand for financial institutions’ stability, said yesterday that the clearing agents would offer direct local-currency settlement to both exporters and importers and conduct market making of the two currencies as the benchmark for traders.
The agents will encourage traders to use more baht and ringgit for payment. About 80 per cent of trade payments currently are in US dollars.
Border countries have attempted to use local currencies but the volumes are small.
Local-currency clearing is new to traders, and the use of baht and ringgit for trade payment is small because of several barriers.
Setting up clearing banks is in line with Phase III of the BOT’s Financial Sector Master Plan. The central bank wants to help local financial institutions connect with their counterparts in the region.
Last year, Thailand’s exports to Malaysia were valued at Bt342 billion and imports from Malaysia at about Bt400 billion.
Malaysia ranks fifth in Thailand’s exports and fourth in imports, so the clearing agents will help reduce costs and promote bilateral trade, Tongurai said.
