KUALA LUMPUR: Malaysia’s international reserves rose in the first two weeks of September in a welcome boost to the country’s weakened external position, indicating the central bank may have eased off slightly from defending an embattled ringgit currency, Reuters reports. Currency reserves increased to US$95.3bil as of Sept 15, Bank Negara Malaysia (BNM) said on Tuesday, from US$94.7bil on Aug. 28.
In a statement, BNM said the reserves are sufficient to finance 7.3 months of retained imports, and are 1.1 times the short-term external debt. Malaysia’s reserves have shrunk by 21% or US$25.4bil this year as its currency, the ringgit, depreciated over 18 percent against the greenback – the worst performing Asian currency this year.
Economists expect the US Federal Reserve’s decision last Thursday to hold off on hiking interest rates to ease the pressure on Malaysia’s reserves due to receding risks of a rush of fund outflows. The ringgit, which closed at 4.2940 on Tuesday, has weakened slightly against the dollar since the Fed’s decision.
In an effort to restore confidence in local markets, Prime Minister Datuk Seri Najib Tun Razak announced economic measures last week of RM20bil (US$4.66bil) to prop up the country’s ailing stock market following foreign investors’ move to pull out of the local bourse.
Malaysia, a gas exporter, has seen a deteriorating trade balance from soft commodity prices, which contributed to the ringgit’s decline. Earlier this year, Malaysia revised its growth outlook downward from between 5 to 6 percent, to between 4.5 to 5.5 percent. Economists expect Malaysia to achieve 5.0 percent growth this year.