Malaysia’s central bank, Bank Negara Malaysia (BNM), closed March 2025 with official international reserves of $117.5 billion—its highest level since late 2014. By September 2024, reserves peaked at $119.7 billion, reflecting a steady accumulation that provides a crucial buffer to stabilise the ringgit, meet external obligations, and bolster investor confidence.
What’s in the Vault?
BNM’s reserves break down approximately as follows (end-September 2024 figures):
- Foreign currency assets (85%): ~$106.8 billion, primarily held in U.S. dollar, euro, and yen cash or securities (e.g., government bonds, bank deposits).
- Gold: $3.3 billion (≈38.9 tonnes), up from 36.4 tonnes in 2018—a modest 2–3% share by value.
- Special Drawing Rights (SDRs): $5.9 billion, boosted by a $4.8–5.0 billion allocation in 2021.
- IMF reserve position: $1.3 billion.
- Other reserve assets: $2.4 billion (miscellaneous foreign-currency assets).
Sizing Up U.S. Debt Holdings
While BNM doesn’t publish a country-by-country breakdown, U.S. Treasury International Capital (TIC) data (mid-2023) reveal that Malaysian entities held:
- $12 billion in U.S. Treasuries (bills, notes, bonds)
- $17 billion in U.S. agency debt (e.g., Fannie Mae, Freddie Mac securities)
- $3 billion in U.S. corporate bonds
—bringing total U.S. debt holdings to around $32 billion.
If BNM itself holds roughly $10–15 billion of this in Treasuries, that represents about 9–13% of Malaysia’s total reserves—no small share.
How Malaysia Compares Regionally
- Holds more U.S. Treasuries than Indonesia.
- Significantly less than Vietnam, Thailand, and the Philippines.
- Far below Singapore, which allocates over 30% of its much larger reserves to U.S. Treasuries.
Why U.S. Debt? Safety, Liquidity, Yield
- Unrivalled liquidity: In a crisis, Treasuries can be sold instantly with minimal market impact, providing dollars to defend the ringgit or settle payments.
- Credit safety: Backed by “full faith and credit” of the U.S. government—never defaulted.
- Stable returns: After rate hikes in 2022–23, 10-year U.S. Treasuries yielded 3–4%. A $10–15 billion holding could generate $300–600 million annually in interest—valuable income for the central bank.
- Trade facilitation: With commodities and exports (palm oil, LNG, electronics) priced in dollars, holding U.S. debt streamlines trade settlements and supports currency stability.
Beyond Treasuries: Equities and Institutional Investors
Malaysian pension funds and sovereign wealth vehicles (e.g., Khazanah) also invest in U.S. equities—roughly $34 billion as of 2023—but these are not counted as official reserves.
Looking Ahead
Malaysia’s reserve strategy balances diversification with prudence. By anchoring a significant slice of its reserves in U.S. debt, BNM ensures both the safety and liquidity needed to weather financial shocks. As global uncertainties persist, this mix of convertible currencies, gold, SDRs, and U.S. debt will remain central to safeguarding Malaysia’s economic stability.