The central banks of Thailand, Indonesia and Malaysia have agreed to promote the use of their local currencies for trade and investment among the three countries. This is the latest move to reduce the impact of the emerging economies' exposure to volatile global markets.
The Bank of Thailand and Bank Negara Malaysia signed a memorandum of understanding (MoU) with Bank Indonesia on a "framework of cooperation". The MoU was signed to promote the settlement of bilateral trade and direct investment in their local currencies.
"The enabling environment will benefit businesses by reducing transaction costs and enhancing efficiency of trade and investment settlements," the three central banks said in a statement.
"Amidst the current volatile global financial market conditions, this will offer businesses more options in choosing currencies for trade settlement," the statement added.
According to the banks, the agreements will help create a wider usage of local currencies in the Asean Economic Community, which will boost the development of regional foreign exchange and money markets.
The Thai and Malaysian central banks had signed a similar agreement in August 2015. They implemented it this year.
"The cooperation arrangements between our central banks have now expanded to include clearly defined protocols and operational frameworks in a broad range of areas, including financial market development, supervision, surveillance, payment arrangements and crisis management," Malaysian central bank governor Muhammad Ibrahim said in a statement.
Increasing volatility in financial markets is one of the biggest issues faced by several emerging economies along with the rising trade protectionism and capital outflows in the face of rising US interest rates.
The currency cooperation will benefit businesses by reducing transaction costs and enhancing efficiency of trade and investment settlements, Bernama reported.
Malaysia's ringgit, which is facing a rout ever since Donald Trump was elected the next president of the US, was down to 4.48 against the greenback earlier in the week. The Thai baht and Indonesia rupiah have also fallen against the dollar this year.