The international reserves of Bank Negara Malaysia amounted to RM405.5 billion (equivalent to USD116.0 billion) as at 31 December 2014 compared to RM441.9 billion (equivalent to USD134.9 billion) as at end-2013. The reserves level as at 31 December 2014 has taken into account the quarterly adjustment for foreign exchange revaluation changes. The reserves position is sufficient to finance 8.4 months of retained imports and is 1.1 times the short-term external debt.^[1]

In 2014, international reserves were supported by higher current account surplus and inflows of foreign direct investment. A cumulative unrealised foreign exchange revaluation gain also added to the value of international reserves. The offsetting outflows were mainly in the form of reversal of non-resident portfolio investment, direct investment abroad by Malaysian companies, acquisition of foreign portfolio assets by resident institutional investors and net repayment of offshore borrowing by the public sector.

Malaysia’s international reserves are usable and unencumbered. The reserves are expected to remain ample in 2015, supported by trade and investment inflows.

^[1]Refers to the redefined short-term external debt, which includes short-term offshore borrowing, non-resident holdings of short-term ringgit debt securities, non-resident deposits with the banking system and other short-term debt. For more information, please refer to the box article entitled 'The Redefinition of External Debt' in the Quarterly Bulletin on Economic and Financial Developments in the Malaysian Economy in the First Quarter of 2014.