International reserves estimated to rise to US$116b by year end

KUALA LUMPUR: Malaysia’s international reserves are expected to be around US$116 billion by year end compared to US$107.6 billion at the end of last year, said Affin Hwang Capital.

The research firm said the reserves, which had remained above US$100 billion since August 2017, were expected remain steady, bolstered by trade surplus and current account surplus.

“The good progress of the country’s Covid-19 vaccination rate and ease in the containment measures will continue to support manufacturing output and external trade,” said Affin Hwang in a note yesterday.

The research firm said in the first 10 months of this year, trade surplus balance remained sizeable at RM202.6 billion, compared to RM145.5 billion in the corresponding period last year.

Malaysia’s current account surplus narrowed to RM11.6 billion in the third quarter from RM14.4 billion in the preceding quarter.

It said year-to-date, the ringgit depreciated by around 5.3 per cent from 4.0203 per US dollar at the start of the year to 4.2318 currently.

While last month’s data for foreign holdings of Malaysian bills and bonds had not been released, Affin Hwang said the level of the country’s reserves remained healthy.

This was due partly to the net foreign inflow into the domestic bond market during the month, reflected by foreign holdings of Government Investment Issue.

Last month, Malaysia’s 10-year Malaysian Government Securities (MGS) yield was lower by 7.2 basis points (bps) at 3.50 per cent, while the three-year MGS declined 1.1 bps to 2.67 per cent.

It added that in the domestic equity market, foreign investors remained net buyers for fourconsecutive months with a net inflow of RM0.1 billion last month compared to RM1.57 billion in October.

Year to date, net outflow from the equity market totalled RM2.08 billion compared to RM24 billion in the January to November period last year.