Malaysia's latest IFR posItion ...

Bank Negara reports that its International Forex Reserve stands at RM 276.7 (USD 72.8) billion as at 15th April 2005 compared with its position as at 31st March 2005 which was RM 275.1 (USD 72.4) billion. On 15th March 2005, its reserve was RM 278.3 (USD 73.2) billion. In one month, the IFR decreased by RM 1.6 billion or USD 0.4 billion contrary to what I expected. If it continues decreasing, then I am afraid it might not reach the USD 100.0 billion that would be the trigger point for BNM to repeg the Ringgit. I am surprised at this because, at the high price of oil, our rate of accumulation of USD should escalate just as Russia is experiencing.

Fundamentals of the Malaysian economy indicate that the Ringgit is undervalued vis-a-vis the US dollar to the extent of between 10%-12 % that I am predicting now, that when it is time to repeg the Ringgit, its exchange rate would be a fixed RM 3.50 to 1.00 USD. Malaysia would continue to stick to the fixed peg regime because its steady, no hedging is required, and above all, it prevents financial terrorists like George Soros and others from speculating on the Ringgit. The only problem is that these money terrorists might speculate the other way round for their own benefits. They would speculate for a steep fall in USD thus disrupting the currencies of Asian nations holding reserves in USD causing problems to China, Japan, Taiwan, Korea, Singapore and to a lesser extent, countries like Malaysia, Thailand and Indonesia who will be holding very much devalued US dollars vis-a-vis the Euro.