Bank Negara Malaysia and Bank of Thailand have signed an agreement with Bank Indonesia to promote the use of their respective local currencies in trade and investment.

The banks on Dec. 23 signed memorandums of understanding on a framework of cooperation to promote the settlement of bilateral trade and direct investment in their local currencies. Bank Negara Malaysia and Bank of Thailand had earlier implemented a similar arrangement.

The move is expected to cut transaction costs for businesses and enhance efficiency of trade and investment settlements between the three nations. It will also reduce the risks associated with the volatility of the international currency market.