Malaysia's foreign reserves rise to US$141b

THE level of international reserves in the central bank is likely to rise further due to the resilience of the Malaysian economy as well as the steady interest rate level, said economists.

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/rup234/Article/index_html
Published: May 24, 2013

Source from (The Sun Daily): http://www.thesundaily.my/news/706507
Published: May 23, 2013

Bank Negara Malaysia announced that as at May 15, foreign reserves had risen to US$141.1 billion (RM428.94 billion), which is sufficient to finance 9.6 months of retained imports.

Alliance Research chief economist Manokaran Mottain said the increase of US$1.1 billion (from US$140.3 billion at end of April) could be due to further inflow of foreign direct investments (FDIs) and portfolio investment into the economy, as well as surpluses from trade activities.

"Total market capitalisation of Bursa Malaysia rose higher to RM1.57 trillion on May 15 (from RM1.47 trillion on April 30), indicating net inflow into the system," he remarked.

On the portfolio front, foreign institutional investors were also the larger net buyers of Malaysian equities (RM5.4 billion in April versus RM4.8 billion in March).

Although the three-month moving average of trade surplus had moderated to RM5.5 billion on the faster growth of imports, it still suggests a net inflow into the system.

Alliance Research expects the total reserves to hit US$145 billion by year-end.

The ringgit strengthened to RM3.0085 versus the US dollar on May 15 in line with the strengthening trend following the general election, when the it reached RM2.9635, the strongest level since August 2008.

With the increase in fund flows, the banking systems continue to be flush with liquidity.

"We expect the reserves to rally further on global liquidity flows into the system, in view of the resilient economic outlook and steady interest rate expectations."

AmResearch economist Patricia Oh said the accumulation of forex reserves clearly indica-tes that inflow of funds remain sizeable owing to relatively firmer economic fundamentals.

In comparison to regional economies, China tops the list with total reserves of US$3.44 trillion to date, followed by Japan with reserves totalling US$1.19 trillion.

In the first quarter, the trade surplus had amounted to RM16.55 billion (from RM29.78 billion in the first quarter of last year).