KUALA LUMPUR, May 20 — Bank Negara Malaysia’s (BNM) foreign exchange (forex) reserves remain resilient, rising by US$800 million to end at US$102.5 billion last month and putting a stop to its last two months of declines, said Public Investment Bank.
It described the reserve position as “sufficiently strong” to support the country’s resilience against external factors and maintain macroeconomic and financial system stability, especially during volatile capital and currency market conditions.
The forex reserve position, sufficient to finance 7.9 months of retained imports and 1.1 times of short-term external debt, was comfortably above its position during the 2009 global credit crises and 1997/1998 Asian financial crisis, it said in a research note.
However, Public Investment Bank cautioned that this could ease in the upcoming months, driven by rising risk premium due to the Covid-19 pandemic. It added that the situation was not unique to Malaysia but applied across the Asean region.
The bank said the expected opening of Asean ports could push trade to restart and recover, a favourable prospect for the country’s trade surplus. This, along with a potential recovery in investor sentiment and the possibility of a Covid-19 “exit strategy” by the government soon, boded well for the country’s forex reserves, it said.
Public Investment Bank noted that forex reserves in ringgit terms also jumped by RM3.6 billion to end at RM443.7 billion in April, its best since November 2013.
The rise in April’s forex reserves, it said, was supported by encouraging trade surplus which had remained steady so far.
“This was offset, however, by sustained foreign selling in the equity market though the selling intensity has slowed down noticeably,” it added.
On the ringgit’s performance, the bank said the local currency was traded at an average of RM4.3022 per US dollar in April, a 0.4 per cent rise on a month-on-month basis — a positive trend consistent with the regional trend.
However, it said a sharper increase was seen for the Indonesian rupiah (+8.7 per cent), the Singapore dollar (+1.0 per cent), Thai baht (+0.78 per cent) and Philippines peso (+0.54 per cent).
It also cautioned that Asean currencies might experience intermittent periods of volatility due to Covid-19, which remained a problem for the region. — Bernama
