High International Reserves are needed, says Bank Negara’s Zeti

BERNAMA reports:

High International Rreserves are needed, says Bank Negara Governor Zeti

The international reserves, which are subject to a high degree of volatility, must remain at a certain level to strengthen the nation.

Bank Negara Malaysia (BNM) governor, Zeti Akhtar Aziz, said during this uncertain period, the country certainly wanted its reserves to remain high to face the volatile situation.”The nation’s international reserves had surged very high at one point and had dropped to around US$80 billion,” she told a media briefing here today.

Zeti said this when asked to comment on former prime minister Dr Mahathir Mohamad’s remark recently that the country’s reserves were too high and could be mobilised for other purposes such as development. She said there was no level which could be considered appropriate right now.

“We want to be in a position where we can deal with this extreme volatility that is taking place around us,” she said, when asked what’s the appropriate level for a nation’s international reserves.

BNM had announced that as at November 15, 2010, its international reserves amounted to RM326.5 billion (equivalent to US$105.8 billion). The reserves position was sufficient to finance 8.8 months of retained imports and was 4.5 times the short-term external debt, it said.

Earlier, Zeti said the ringgit has increased by 6% or 7% since it was unpegged in July 2005. “If our fundamentals continue to improve, then we can expect our currency will continue to strengthen,” she said at a talk on “International currency movement: Its impact on Malaysia and international trade’ at the CEO Business Luncheon here today.

The luncheon was organised by International Chamber of Commerce Malaysia. Zeti said BNM wanted to ensure that the changes in the ringgit were gradual so that the private sector could have the time to make their adjustments and shift the allocation of their resources accordingly.

courtesy of Din Merican