Malaysia has been taking initiatives to make its banking and financial sectors more business friendly. The country is part of the ASEAN Free Trade Area and has been promoting trade among the ASEAN members.
The official Malaysian currency is the ringgit, formerly known as the Malaysian dollar. The currency is issued by the country’s central bank, Bank Negara Malaysia. When the Malaysian dollar (M$) replaced the Malaya and British Borneo dollar at par, it was pegged to the British pound sterling. In 1995, the country adopted the free float regime and the ringgit traded as a free float currency until September 1998, when Bank Negara Malaysia pegged the ringgit to the US dollar. From mid-2005, the central bank stopped pegging the country’s currency to one particular currency and adopted a managed float against several key currencies.
The Malaysian stock market comprises of three major stock exchanges, the Kuala Lumpur Stock Exchange (KLSE), MESDAQ (Malaysian Exchange of Securities Dealing & Automated Quotation) and Malaysia Exchange. As of December 2007, the Malaysia Exchange had 986 companies listed, with a market capitalization of $325 billion, and experienced an average daily turnover of $684 million. Launched in late-1997, the MESDAQ is well known for the trading of technology-based stocks.
Commodity trading in Malaysia takes place in the Bursa Malaysia Derivatives Exchange (MDEX). The MDEX was formed by themerger of the Commodity and Monetary Exchange of Malaysia (COMEX) and the Kuala Lumpur Options and Financial Futures Exchange (KLOFFE) in end-2000. Commodities such as crude palm oil futures and crude palm kernel oil futures as well as options and government securities are traded on this exchange.