Ringgit Depreciates, International Reserves Fall Below $100 Billion Following BNM's Intervention

<p>&nbsp;Local analysts are beginning to be unhappy with reports of a reduction in foreign currency reserves that fell below the $100 billion mark for the first time since November 2022 following intervention measures by Bank Negara Malaysia (BNM).</p><p><br /></p><p>According to Kenanga Research, the fall in reserves of $1.1 billion or 1.1% month-on-month recorded $99.2 billion as of the end of June.</p><p><br /></p><p>The decline in international reserves was seen as an effect of central bank intervention in the foreign currency market in addition to losses from the quarterly foreign exchange revaluation driven by a 0.4% increase in the US dollar index.</p><p><br /></p><p>Taken as a whole, Bank Negara's international reserves remained on a downward trend for 3 consecutive months, decreasing from $1.3 billion month-on-month, to a 7-month low of $111.4 billion as of June.</p><p><br /></p><p>Bank Negara's reserve gold experienced a decline for the first time in 9 months with gold prices falling 1.9% month-on-month, and 2.5% quarter-on-quarter due to the previous strengthening of the US dollar.</p><p><br /></p><p><br /></p><p>The Bank Negara's action of selling US dollars and buying the ringgit since June is an effort to stabilize the ringgit's declining value.</p><p><br /></p><p>According to BNM, the current reserve position is still sufficient to finance 7.6 months of delayed imports and 1.1 times the amount of short-term foreign debt.</p><p><br /></p><p>Economic analyst from the Malaysian University of Science and Technology Dr Geoffrey Williams said it would be difficult for Bank Negara to do anything to influence the value of the ringgit in the short term.</p><p><br /></p><p>According to him, the country's foreign reserves are too low for the central bank to intervene in the long term and the move to raise the OPR interest rate also only has a short-term effect and can have a negative effect on the ringgit for a longer period of time.</p>