When hearing the title “Malaysia is no longer using the dollar?”, some of us may recall the history of 1975, the moment when Malaysia changed the name of its official currency from “Malaysian Dollar” to the Malaysian Ringgit.
However, in today’s modern economic context, this phrase carries a much greater and strategic meaning. It refers to “De-dollarization” which is Malaysia’s bold move to reduce its dependence on the United States Dollar (USD) in international trade.
Through the latest report from the Ministry of Finance (MOF) and Bank Negara Malaysia (BNM), Malaysia is now increasingly moving away from the USD and switching to the local currency when trading with its major trading partners.
Based on an official statement in parliament by the Prime Minister and Minister of Finance, Datuk Seri Anwar Ibrahim, Malaysia’s cross-border trade and investment payments with its three major partners, namely China, Thailand, and Indonesia, are now witnessing a drastic shift.
As of November 2025, the total trade transactions settled using local currency (no longer using USD) have jumped to RM82.1 billion!
Compared to the situation 16 years ago (in 2009), the total trade using local currency only recorded RM3.6 billion. This shows a huge paradigm shift in the country's financial system.
The breakdown of the total RM82.1 billion by trading partner country is as follows:
China: RM62.6 billion (Increase from RM0.5 billion in 2009)
Thailand: RM10.0 billion (Increase from RM1.9 billion in 2009)
Indonesia: RM9.5 billion (Increase from RM1.2 billion in 2009)
Why Does Malaysia Want to 'Run' From the Dollar?
For decades, global markets have been tied to conventional systems such as SWIFT which are dominated by USD. Excessive dependence on USD exposes the Malaysian economy to significant external risks.
According to Bank Negara Malaysia (BNM), the effort to promote local currency transactions is based on several critical factors:
Reducing Currency Fluctuation Risk: The volatile value of the USD can affect the country's import and export costs. When Malaysia uses the Ringgit or Yuan/Baht/Rupiah directly, traders do not need to worry about the sudden depreciation or strengthening of the American currency.
Reducing Transaction Costs: Previously, if a Malaysian company wanted to buy goods from China, the Ringgit had to be converted to USD first, before being converted back to Yuan. This double conversion process involved high bank charges. Now, trade can be made directly (Direct Settlement).
Strengthening Regional Financial Resilience: This measure protects the Southeast Asian economy and its trading partners from the impact of economic sanctions or financial crises originating from the west.
BNM Strategy and the Future of Dollar-Free Trade
This achievement did not happen overnight. BNM has implemented the Local Currency Transaction Framework with Thailand since 2016 and Indonesia since 2017. Meanwhile, direct transactions with China have been in place since 2010 with the appointment of the Bank of China (Malaysia) as the official clearing bank.
Not only that, Malaysia is also exploring future financial technology through the Central Bank Digital Currency (CBDC), including active participation in Project Dunbar to test faster cross-border payments without going through a Dollar proxy.
So, is Malaysia no longer using the Dollar?
The answer: Malaysia is heading in that direction in the international trade sector. Although the US Dollar (USD) cannot be completely eliminated from the global ecosystem, Malaysia's move to reduce dependence and record a record RM82.1 billion in local currency trade proves that the Ringgit is now stronger, more independent, and no longer needs to constantly bow under the shadow of the Dollar.
