KUALA LUMPUR, April 28 — The Malaysian central bank’s short-term dollar borrowings on its currency reserves book hit an all-time high of nearly US$18 billion (RM78 billion) in March, data today showed, reflecting what the bank said were its efforts to keep its money markets liquid.

While Malaysia’s headline reserves have remained stable over recent months, its dollar borrowings in the form of currency swap deals have risen steadily from around US$2.8 billion in October.

Bank Negara Malaysia’s detailed foreign exchange reserves data showed headline reserves stood at US$95.42 billion at end-March. Net foreign currency reserves were US$88.66 billion.

It also showed swap transactions the central bank has undertaken with the markets — borrowing dollars and lending ringgit — totalled US$17.68 billion.

In comments to Reuters last month the central bank said the short dollar positions had arisen as part of its routine money market operations to inject ringgit into the banking system.

A short dollar position arises when the central bank swaps dollars for ringgit, with an agreement to reverse that exchange after a fixed period of time.

The bulk of the BNM’s forward position — about US$12.4 billion — is due within the next three months, according to the data. The rest matures in three months to a year.

"The short forward positions amounted to US$17.68 billion as at end-March 2017, reflecting the management of ringgit liquidity in the financial system,” Bank Negara Malaysia said in a statement accompanying the detailed breakdown of reserves.

The central bank has the option to either settle the swaps or roll them forward. If the swaps were settled the bank’s headline reserves would fall by the same amount.

Malaysia’s reserves have fallen around a third from a record high US$141.4 billion in 2013, leaving the central bank less ammunition to defend what has been one of Asia’s worst performing currencies over the past year.

The ringgit lost 8 per cent of its value against the dollar in October-December as foreign investors, who own about a third of the country’s foreign debt, pulled money out of its bond market. It hit a 19-year low in early January after BNM barred them from using offshore currency markets to hedge their exposure, accelerating the exodus.

Bank of America Merrill Lynch’s co-head of Asian currency strategy Claudio Piron said the short position in the forward reserves book could partly be because the BNM had also encouraged exporters to bring their earnings home to help alleviate dollar shortages in the market.

Piron said BNM may have bought dollars from exporters and sold them back at a future date, via a swap, to help them meet their overseas payment obligations. With foreigners also returning to the oversold Malaysian markets gradually, he said the BNM might soon be able to replenish its reserves.

"Investors are looking again at Malaysia as a value trade,” Piron said. "If anything, we might start to see inflows. And the question is whether BNM will use those inflows to rebuild FX reserves.” — Reuters