International Reserves, after Ringgit’s sudden tumble

No, Malaysia is not yet bankrupt and not anywhere near becoming a bankrupt nation. Yes, I believe the current intervention by BNM to help stabilise the Ringgit is perfectly fine. We are a sovereign nation and BNM should safeguard our interests first. Maybe if there are more disemmination of information on what’s happening may be good. A pictogram for example since many may not want to read long explanations. Hopefully no unforeseen shocks / circumstances from external. Anyway the below would be a very short statement from Bank Negara Malaysia (BNM) with regards to Malaysia’s international reserves.

— Press Release from BNM —

The international reserves of Bank Negara Malaysia amounted to RM399.6 billion (equivalent to USD96.4 billion) as at 30 November 2016. The lower international reserves position reflected the liquidity support in the foreign exchange market. The reserves position as at 30 November 2016 is sufficient to finance 8.3 months of retained imports and is 1.2 times the short-term external debt[1].

— End of Press Release —

Two most important points to understand would be how many months of retained imports can the international reserves sustain. It is enough for 8.3 months. Secondly, whether it is above the short-term external debts. It is at 1.2 times currently. Yes, this is nowhere near excellent when compared to a neighbouring nation but Malaysia’s Q3 GDP was 4.3 percent. All international rating agencies are still assigning “Investment Grade” to Malaysia and we can google for all the predictions from famous banks, analysts and economists. Malaysia’s GDP is still expected to grow 4 percent or higher for 2016. Happy believing.

written on 8 Dec 2016

Next suggested article:   BNM: Pre-Emptive measure is better

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