Malaysia’s external reserves looking more stable from August

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Written by Syndicated News

KUALA LUMPUR, Oct 26 2015 : Malaysia’s external reserves have somewhat stabilised since August this year, ranging between US$93 billion-US$95 billion, after falling from the US$116 billion-mark at end-2014. (US$1=RM4.252)

Maybank IB Research in a note said the recent trend suggested that Bank Negara Malaysia (BNM) has been far less “active” in the forex market, apart from improvement in foreign portfolio capital flows.

It said the external reserves would also be supported by repatriations by the government linked companies (GLCs) and government-linked investment funds (GLIFs).

The external reserves rose to US$94.1 billion or RM418.0 billion at mid-October from the six-year low of US$93.3 billion(RM415.1 billion) at end-September.

These were sufficient to cover 8.8 months of retained imports and were 1.2 times the short-term external debts compared to the lows of 7.3 months at mid-September and 1.0 times in August.

Year-to-date, the external reserves had fallen 15.4 per cent from the US$111.2 billion recorded in January 2015.

According to Maybank IB, foreign portfolio capital outflows had eased from September-October.

For the first time since April this year, foreign investors were net buyers of Malaysian equities at RM0.9 billion to date in October, compared to an outflow of RM2.3 billion in September.

Year-to-date, foreign net selling totalled RM17.2 billion compared with RM6.9 billion for 2014.

Meanwhile, foreign flows in the bond market reversed to a net gain of RM4.1 billion in September 2015 from the net outflows of RM8.9 billion the preceding month.

This was driven by the RM8.1 billion net inflows into Discount Instruments which offset the RM3.6 billion net outflows from Malaysian Government Securities (MGS), as foreign investors reinvested their money from matured MGS during the month into BNM Notes, rather than exit. – Bernama



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