BNM international reserves still healthy, Dewan told

MALAYSIA’S central bank’s international reserves are still sufficient to sustain the economy, the Dewan Rakyat was told.

Deputy Finance Minister II Yamani Hafez Musa said Bank Negara Malaysia’s (BNM) international reserves stood at US$109bil (RM480.1bil) as of June 30, compared to US$112.8bil (RM474.2bil) the previous month.

He explained that the current figure was enough to accommodate imports of goods and services for 5.8 months and was 1.1 times the country’s short-term external debt.

“This is based on assessing the reserve adequacy metric by the International Monetary Fund (IMF).

“At the moment, our current reserves are considered sufficient, although we will continue to monitor (the situation) to stabilise our ringgit,” he said in reply to a question from Datuk Che Abdullah Mat Nawi (PAS-Tumpat) during Question Time.

Che Abdullah was asking the Finance Ministry if there would be an increase in the country’s short-term external debt and what actions would be taken to address the issue.

Yamani also admitted the importance of the international reserves’ support, adding that without it, there would be uncertain ringgit fluctuations due to the increased volatility in the market.

The deputy minister pointed out that financial market stability was also important to boost foreign investors’ confidence in the local market, which will have a positive impact on the country’s international reserves.

To a question from Datuk Seri Ahmad Maslan (BN-Pontian) on the weakening ringgit compared to the US dollar, Yamani dismissed the suggestion that the ringgit was doing badly.

He explained that the US dollar was strengthening compared to the majority of global currencies due to aggressive interest rate increases in the US as well as other external factors like the slow economic growth in China and the conflict in Ukraine.

“Since the start of 2022, the ringgit value fell 6.2% compared to the US dollar, which is in line with the movement of regional currencies and other developed nations, which saw a similar decrease of between 2.8% and 16.4%,” said Yamani.

He said the government would continue to manage the risks posed by domestic and external developments, adding that BNM would also continue to strive to ensure a stable foreign exchange rate.

On the impact of the overnight policy rate (OPR), which has increased by 50 basis points this year, Yamani said the gradual hike was not expected to gravely affect Malaysians.

Citing an example, he said that one-third of borrowers from low-income households took fixed-rate car and personal loans as opposed to the floating rate, which will be affected by the OPR hike.

“The increase in monthly payments for floating rate borrowers will also be minimal. At the same time, depositors will also benefit from higher interest returns,” he said.

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