The international reserves of Bank Negara Malaysia amounted to RM335.7 billion (equivalent to USD101.3 billion) as at 31 December 2007. The reserves level has also taken into account the quarterly adjustment of the foreign exchange revaluation loss, following the strengthening of ringgit against the major currencies during the quarter. The reserves position is sufficient to finance 8.5 months of retained imports and is 6 times the short-term external debt.

For the year 2007 as a whole, the international reserves increased by RM45.3 billion, reflecting the strong fundamentals of the Malaysian economy, in particular the balance of payments position. Foreign exchange inflows were generated mainly from higher repatriation of export earnings, and larger inflows of foreign direct investment and portfolio investment in tandem with the improved investor confidence. Meanwhile, outflows mainly reflected higher payments for imports of goods and services, as well as the repatriation of profits and dividends accruing to foreign companies operating in Malaysia. The higher overseas investments by Malaysian companies reflected the increased capacity and continued interests of Malaysian companies to diversify their operations abroad.

During the year, the cumulative foreign exchange revaluation loss amounted to RM5.6 billion, following the strengthening of ringgit against the major currencies, particularly in the first and fourth quarter of 2007.

Malaysia's international reserves, which are usable and unencumbered, are expected to remain strong in 2008, given the positive prospects for the economy and the continued inflow of foreign direct investment.