Monday, January 8, 2018

DEAR MR JOHARI…

As posted by Dr. Mahathir Mohamad at Che Det on December 24, 2017

Dear Mr Johari,

1. Do not try to confuse the public by saying that it is just a normal outflow of foreign funds from Malaysia.

2. Yes, foreign investors do liquidate their holdings in Malaysia to take out their money when the Ringgit depreciate or from fear of shares collapsing.

3. Bank Negara as managers of our foreign currency reserves is already holding the foreign currencies (US bonds).

4. Its duty is to sustain the value of the Malaysian Ringgit should the market lose confidence in the Government’s management of its finances among other things.

5. To sustain the value of the Ringgit, Bank Negara must buy the Ringgit i.e. show there is a demand for the Ringgit.

6. But with what can Bank Negara buy the Ringgit. The obvious source is the foreign currency reserves it is holding. Effectively Bank Negara id trading USD from the national reserves for devalued Ringgits.

7. The Ringgit value may be sustained. But continued lack of confidence in the market may force further devaluation of the Ringgit.

8. And Bank Negara would have to use more USD from the reserves to support the Ringgit. As we all know the Ringgit did not recover during those years.

9. The outflow of USD39.6 billion can only be caused by Bank Negara selling US dollars from the national reserves, causing the reserve to lose money during the period between 2013 to 2015. This is admitted by Bank Negara itself. This is what happens when the Ringgit is allowed to float.

10. Can Mr. Johari explain how else the reserve can shrink? Can he explain why Bank Negara has to follow the trend and join in the outflow of the USD? When the private sector was selling the depreciating Ringgit for USD, why is Bank Negara selling the USD for devalued Ringgit.

SUPPORT US

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