The RM at 5: BN & Zeti have no capacity to defend Ringgit ;freefall to RM 5 to the USD not unlikely

by Ganesh Sahathevan


The  Ringgit has been  vulnerable to attack for at least the past 20 years given that Malaysia's reserves of gold and foreign exchange are not actually financed by Government surpluses but  financed primarily by statutory deposits that are likely to be depleted when there is an outflow of funds from the local financial system.

The fact that Zeti and Bank Negara have had to resort to "gentle suasion" to plead with traders not to do anything that will see the Ringgit come to its logical end suggests that the so-called funding model reliant as it is on the SDR , is broken. That  end could well be closer to somewhere  near. RM 5 to the USD,
END

The charts and tables below from Bank Negara's own records illustrate the issues raised above.


As at close of business on Friday 14 August  2015

AssetsRM  
Gold and Foreign Exchange and Other Reserves including SDR356,364,305,981*
Malaysian Government Papers2,622,483,978
Deposits with Financial Institutions1,405,800,340
Loans and Advances6,844,090,679
Land and Buildings2,113,933,570
Other Assets8,479,232,650
377,829,847,198
 
Capital and LiabilitiesRM  
Paid-Up Capital100,000,000
Reserves94,758,084,668 
Currency in Circulation82,290,381,138
Deposits by:
          Financial Institutions
140,502,013,907
          Federal Government
13,238,313,281
          Others
1,009,611,684
Bank Negara Papers18,678,498,132
Allocation of Special Drawing Rights7,074,899,285
Other Liabilities20,178,045,103
377,829,847,198
 
The US Dollar equivalent of International Reserves as at 14 August 2015 is USD94.5 billion.
 
KUALA LUMPUR
21 August 2015		DR. ZETI AKHTAR AZIZ
GOVERNOR






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