Malaysia's Foreign Exchange Reserves Down US$2bil in Sept

PETALING JAYA: Bank Negara’s international reserves fell US$2bil in the last two weeks of September to end the month at US$93.3bil.

“The decline in reserves level in US dollar terms as at Sept 30 was mainly due to the quarterly adjustment for foreign exchange revaluation changes,” the central bank said in a statement yesterday.

In ringgit terms, the reserves position stood at RM415.1bil.

The ringgit is Asia’s worst-performing currency this year, driven by a plunge in Brent crude that raised concerns about lower revenue for the region’s only major oil exporter. Meanwhile, foreign investors sold their holdings of Malaysian equities and bonds in anticipation of a US interest-rate increase.

Malaysia’s foreign-exchange dropped by US$12.2bil in the third quarter, the most since 2008, and are down 20% for the year.

The bulk of the reserves level which is measured in US dollar was attributed to foreign currency reserves of US$85.2bil.

The smaller constituents of the reserves position was attributable to International Monetary Fund reserves position of US$0.8bil, special drawing rights US$1.8bil, gold US$1.4bil and other reserve assets US$4.1bil.

“The reserves position (on Sept 30) is sufficient to finance 8.6 months of retained imports and is 1.2 times the short-term external debt,” Bank Negara said in a press release yesterday.

The ringgit had traded at its weakest level before the peg was introduced in 1998 in the past two weeks and had reached an ultimate low of 4.4812 against the greenback on Sept 29.

A currency trader said the reserves level needed to be looked into with proper perspective and not just in strict US dollar terms given the extraordinary circumstance surrounding the ringgit’s movements over the past month or so.

The trader noted that while in terms of US dollar, the level of reserves had declined, but the reserves level as measured by a more tangible indicator of the ability to finance retained imports actually rose on Sept 30 from Sept 15.

This figure of being able to finance the retained imports rose to 8.6 months against a lower level of 7.3 months on Sept 15, statistics by Bank Negara showed.

“In hindsight, I believe that the ringgit could have started its track to recovery,” the trader said.