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International reserves up and down (at the same time)

Posted in Malaysian economy and more

International currency reserves for countries is a consideration of whether or not the country is loved by investors or not. Too low and the investors started to get worried. Well, for most countries except the U.S since international reserves are usually denominated in the US$.  Of course, we can also imagine what will happen if some other currencies start to be a major denominator for international reserves and not just the US$. Coming back to Malaysia. The international reserves are both UP and DOWN at the same time. Misleading? How can international reserve be up and down at the same time? Well, we can ‘blame’ the ringgit for rising a bit against the US$ currently. So, in US$ terms, the reserves are UP. In Ringgit terms however, it is down. Oklah, can be considered as good news because we are on the right track as long as the international reserves continue to go up towards a three figure number soon, hopefully. The below would be Bank Negara Malaysia’s statement. Short and sweet.

— Statement from Bank Negara Malaysia —

The international reserves of Bank Negara Malaysia amounted to USD98.9 billion (equivalent to RM424.8 billion) as at 30 June 2017. In USD terms, the level of reserves continued to increase. However, in ringgit terms, it declined following stronger ringgit during the second quarter. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt.

— End of statement —

Source: Bank Negara Malaysia

Another article on why international currency reserves are important in TheStar here.  The writer is Martin Khor. He is the executive director at the South Centre.

Next suggested article: BNM’s accommodative stance for the economy maintained

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