Japan and Malaysia have signed a third Bilateral Swap Arrangement (BSA) worth up to US$6 billion, strengthening financial cooperation between the two countries and reinforcing regional financial stability.
The agreement was signed between the Bank of Japan (BOJ), acting as agent for Japan’s Minister of Finance, and Bank Negara Malaysia (BNM), and took effect on Sept 18, 2026.
Under the BSA, both sides may exchange their respective local currencies for US dollars, while the arrangement also allows BNM to exchange Malaysian ringgit for Japanese yen.
Japan and Malaysia said the renewed arrangement is expected to deepen bilateral financial cooperation and strengthen financial resilience in the region.
Separately, Japan’s Ministry of Finance and BNM signed a Memorandum of Cooperation (MoC) to establish a framework aimed at promoting the settlement of trade and investment transactions in local currencies.
Under the MoC, both authorities agreed to pursue initiatives supporting the use of local currencies in eligible cross-border transactions.
The cooperation will also include greater information sharing and periodic discussions between Japanese and Malaysian authorities.
The two sides said the initiative marks an important milestone in bilateral financial cooperation and could support closer trade and investment ties between Malaysia and Japan.
The local currency settlement framework could also help broaden the use of the ringgit and yen in bilateral transactions, reducing reliance on third-party currencies for eligible trade and investment flows.
