Malaysian Fx Reserves: Are the Inmates Running The Asylum?

By Jeevindra Kumar 

Our Foreign Exchange reserves hit a high of 126 Billion US Dollars in Q2 of 2008. By the following quarter, our reserves dropped by 13%, or about 16 Billion US Dollars.

The net change globally during the same period was zero. Sweden and Iceland had an increase in their Fx reserves of 23% and 44% respectively in that period, among the best numbers on record.   

Nine months later, at the end of the 1st Quarter of 2009,our official reserves had fallen by 38 Billion US Dollars or 121 Billion Ringgit, an annualised rate of loss of 40% p.a.

From Q2 08 to Q1 09, global Fx reserves dropped by 3%, which means we outperformed the global rate 10 fold. Denmark’s reserves grew by 35%, as did Hungary’s, while lowly Iceland only managed to add 22% in that same period. 

We lost 13% in one quarter and 30% over 3 quarters, while our neighbour Singapore lost 4% and 6% in the same periods. Thailand lost 3% and gained 10%, Philippines gained 1% and 6%, China’s reserves grew by 5% and 8% in that time. If you have friends in Aruba, congratulate them for a growth of 7% and 44%, while our guys were busy losing our shirts. 

Since the low in Q1 2009, global reserves have grown by 19% till Q1 2010. Sri Lanka’s reserves have grown 234% in those 12 months, and Sweden added 68%. 18%, 24% and 31% growth respectively for Singapore, Thailand and Indonesia.

Philippines did 17%, China’s grew 27% and India added 11%. Malaysia managed to underperform once again, by managing less than half the global rate, at 8%. We remain 31 Billion US Dollars below our high from 2008, while China’s reserves have become 700 Billion US Dollars higher in the same period. Even Greece’s reserves have grown 53%. 

Perhaps we cannot expect any better from a country that thinks it’s smarter to spend money sponsoring African Muslims in local universities, rather than their own citizens; sooner or later the inmates will end up running the asylum. 
 

Data source: http://www.research.gold.org/reserve_asset/ and other places