KUALA LUMPUR — The US$39.6 billion (RM160 billion) that Tun Dr Mahathir Mohamad alleged was lost to currency trading between 2013 and 2015 was in fact an outflow of foreign funds from the economy, said Datuk Seri Johari Abdul Ghani.
The second finance minister explained in a statement today that such capital outflows were typical due to the disruptions caused by low oil prices then as well as investors aiming to take advantage of an expected interest rate increase in the US.
The withdrawal of foreign capital consequently drove up demand for the dollar over the ringgit, as investors sought to repatriate their holdings previously held in the local currency.
This required Bank Negara Malaysia to provide sufficient liquidity to accommodate the demand for the dollar, which the minister said was fundamentally different from currency trading.
Johari then pointed out the robustness of BNM’s system, noting that it had been able to withstand the significant outflows without notable disruptions to the local financial markets and economy.
“The insinuation made in the video that BNM had been negligent in managing international reserves during period 2013-2015 was not only reckless but was also an attempt to undermine BNM’s institutional mandate to safeguard the economic and financial stability of the nation by creating doubts and misperception among the general public,” he added.
Dr Mahathir made the allegation in a video posted on YouTube, during which he questioned why a Royal Commission of Inquiry was not convened for the alleged losses when one had been formed to probe the RM31.5 billion lost to currency trading during his administration.