Malaysia's forex reserves plunge $3.4b in two weeks<\/p>\n
KUALA LUMPUR (AFP): Malaysia's central bank said yesterday
\nthat the country's foreign exchange reserves plunged US$3.4
\nbillion in the first half of July, apparently reflecting
\nintervention to support the ringgit.<\/p>\n
Bank Negara Malaysia said reserves fell from 70.705 billion
\nringgit ($27.2 billion) on June 30 to 61.898 billion ($23.8
\nbillion) on July 15.<\/p>\n
Asked about the steep decline, Prime Minister Mahathir Mohamad
\nsaid he had to hear details before he could determine the cause
\nof the fall.<\/p>\n
\"Whether it is a cause of defending or not,\" he told reporters
\non his return from a two-month break abroad, \"I have to listen to
\nthe details about this first. You just cannot make a decision on
\nthe basis of one factor alone.\"<\/p>\n
But TA Securities senior economist Anthony Dass said the fall
\nin foreign exchange reserves reflected efforts to prop up the
\nringgit, which like other regional currencies has been hit by a
\nwave of selling following the Bank of Thailand's decision to
\nfloat the baht at the beginning of this month.<\/p>\n
\"They were aggressively defending the ringgit resulting in the
\nreserves coming down,\" he said. \"It has been a very costly
\naffair.\"<\/p>\n
Dass said Bank Negara should not have defended the Malaysian
\ncurrency.<\/p>\n
\"They should have let the ringgit go and let market forces
\ndetermine everything. Then the central bank would not have lost
\nso much in reserves and interest rates would not have been this
\nhigh,\" he said.<\/p>\n
Speaking on his return home Tuesday, Mahathir denounced
\ncurrency speculators for using their freedom as a \"political
\nweapon\" against poor countries.<\/p>\n
\"I find that freedom in the field of speculation has been
\nturned into a political weapon to the extent that its gives power
\nto one person, because he's rich, to force countries that are
\nfree to bow to his wishes,\" he said.<\/p>\n
\"We like the freedom to trade but if the freedom is abused to
\nmake the poor become poorer just because they're having a
\ncrusade, this is not good,\" Mahathir said.<\/p>",
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