The Borneo Post (Sabah)
Rising foreign exchange reserves a sign of rebound in the works
KUALA LUMPUR: Bank Negara Malaysia’s (BNM) foreign exchange reserves (forex reserves) for its first quarter of 2021 jumped by US$6.9 billion year on year (y-o-y) to end at US$108.6 billion, a rise that is consistent with regional peers.
Forex reserves in ringgit terms, in the meantime, increased by almost RM11 billion to end at RM451 billion, a multi-year high thanks to the rebound in trade and capital markets performance.
Public Investment Bank Bhd (PublicInvest Research) saw that these reserves at the end of 1Q21 was sufficient to finance 8.8 months of retained imports (RI) and 1.2 times of shortterm external debt (ST debt), an improvement against the previous quarter and a year ago.
“Malaysia’s forex reserves position is resilient and comfortably above the international adequacy standards which is able to offset against shocks and contagion effects,” it said in its notes yesterday. “Its steady position will also underpin macroeconomic and financial system stability especially during volatile capital and currency market conditions.
“The bright prospect ahead following the receding threat of the global Covid-19 pandemic following the rapid vaccination drive that will gather in speed in the second half of the year (2H) will underpin further rebounds in our forex reserves position.”
PublicInvest Research saw that Malaysia’s forex reserves position will be shored-up by the projected turnaround in trade activities across Asean amid full economic openings post Covid-19 lockdown and also a rise in the risk premium of major economies currencies like the US dollar and yen, no thanks to the strong Covid-19 headwinds.
Better handling of the Covid-19 pandemic by now also suggests uninterrupted economic activities amid Asean authorities opting for more targeted containment measures and therefore, a lesser impact on output, it added.