Article: Dedollarisation and Malaysia's Stance
MMJ 20230929
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DEDOLLARISATION AND MALAYSIA’S STANCE
On August 15th 2023 14 nations divested enormously, in almost a planned move, from US Treasury Bonds. These countries are China, India, Brazil. Taiwan, UAE, Saudi Arabia, Belgium, Luxembourg, Singapore, South Korea, Mexico, Thailand, Vietnam and the Philippines.
Saudi Arabia has brought down their US Treasury Bonds holdings from a height of USD184 billion to USD108 billion. UAE divested US Treasury Bonds amounting to USD5 billion in just two months, May/June 2023.
BRICS at the forefront of the Dedollarisation March counts 25% of World GDP. 40 countries including Saudi Arabia, UAE, some European countries, and Indonesia has applied to join BRICS.
A new BRICS currency backed against gold is the ultimate aim of this new grouping. Meanwhile bilateral currency SWAPs and Yuan is encouraged as the replacement currency to USD in international trades.
The aim is to move away from USD. It may not be possible to immediately replace USD with another reserve currency due to the elaborate USD Treasury Bond market set up to capture foreign USD holdings. So what BRICS is attempting is to ensure trades are done by not using USD. In Bilateral Trades this is achieved by Bilateral Currency SWAPS while oil trades are transacted by the use of Petroyuan.
China still has about USD830 billion in US Treasury Bonds which came down from a height of USD1.3 trillion. They plan to swap this USD830 billion US Treasury bonds into 13,000 tonnes of gold which will make China the biggest holder of gold in the world making Yuan the candidate for the next world reserve currency.
US and USD will diminish and sink in value and importance.
Where is Malaysia’s position in all these?
At only 39 metric tonnes of gold in hand Malaysia is the 50th lowest country in terms of gold holding.
Even Kampuchea, Pakistan and Philippines has more gold than Malaysia.
Malaysia’s foreign reserves is about USD113 billion of which gold is only 2.1% valued at USD2.38 bn.
It can safely be said the majority of the balance of Malaysia reserves is in USD minus some SDR and some other small foreign assets.
This buys us 4 months of imports.
If USD sinks dramatically how many months of imports can our foreign reserves buy?
Unlike Indonesia, Thailand, Philippines and Vietnam we have not even applied to join BRICS.
We are not even among the 40 countries attending the BRICS Conference in South Africa!
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Dikemaskini [Updated]: Sam Ahmad 20230831