KUALA LUMPUR, Dec 26 ― The Malaysian economy especially the international reserve is more stable and growing steadily now compared to when Tun Dr Mahathir Mohamad was in power, Datuk Seri Johari Abdul Ghani said today in response to the former prime minister.
The Finance Minister II explained that compared to during Dr Mahathir’s administration when Bank Negara Malaysia (BNM) was involved in heavy speculative foreign exchange transactions, the current reserves are legitimate and stable.
“BNM and the country have since come a long way, particularly in instituting the necessary reforms and check and balance with regard to its foreign exchange forward transaction activities.
“In fact, our international reserves continues to strengthen ever since and as at end November 2017 the reserves amounted to US$101.9 billion (RM415.5 billion) and were able to support 7.5 months of retained imports,” Johari said in a statement today.
The Umno minister also explained that compared to before instead of speculative foreign exchange transactions, BNM now only dabbles with orderly management of foreign exchange market.
“The speculative foreign exchange activity, to put it in simpler words, is a kind of ‘gambling’ activity with the hope of quick returns.
“The orderly management of foreign exchange market, however, is very much different in that it is a facilitation of liquidity by BNM to market participants in the country for the purpose of mitigating imbalances with respect to the ringgit’s supply and demand in the market,” Johari said.
He was responding to a blog post by Dr Mahathir alleging that BNM had lost RM160 billion in international reserves due to foreign exchange trading.
Johari had then clarified that the transactions which happened between 2015 and 2016 were caused by outflow of foreign funds out of the country and not because of foreign exchange trading.
