UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the publication of foreign portfolio data in Malaysia.
Key Takeaways
“Malaysia continued to draw foreign portfolio inflows for a fourth straight month in Apr (totaling MYR1.2bn vs MYR5.3bn in Mar) despite lingering concerns about global banking sector turmoil, US debt ceiling, and dimmer growth prospects. It marked the longest streak of foreign portfolio inflows since Oct 2020, solely driven by persistent foreign purchases of Malaysian debt securities (+MYR1.5bn vs +MYR6.6bn in Mar) as the equity space still faced foreign selling pressures (-MYR0.3bn vs –MYR1.3bn in Mar).”
“Bank Negara Malaysia (BNM)’s foreign reserves reversed course and erased almost all of its gains recorded in the preceding month (end-Apr: -USD1.09bn m/m to USD114.4bn vs end-Mar: +USD1.17bn m/m to USD115.5bn), partly reflecting smaller foreign portfolio inflows and slower external trade flows amid a weaker currency in the month. The reserves position is sufficient to finance 5.1 months of imports of goods & services and is 1.0 time of total short-term external debt. BNM’s net short position in FX swaps widened by USD0.5bn m/m to a fresh high of USD26.7bn (equivalent to 23.1% of FX reserves) as at end-Mar.”
“Moving into 2H23, we continue to expect volatile capital flows into emerging markets (EMs) including Malaysia as investors remain wary of any further upheaval in the US financial system, potential US debt default, deteriorating global growth outlook, and geopolitical risks emanating from upcoming elections for a handful of EMs. That said, still strong fundamental factors (i.e. decent economic growth and manageable inflationary pressures) and expectations of broad dollar weakness will remain the core drivers of foreign portfolio flows to EMs and Asian FX movement in the near term.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD faces the next support at 0.6700
AUD/USD retreated further and approached the key 0.6700 contention zone, where some initial support seems to have turned up, always against the backdrop of a persistent risk-off mood in the global markets.
EUR/USD struggled to surpass 1.1000
EUR/USD remained on the defensive, receding to the 1.0970 zone after failing to extend an early bull run to the psychological 1.1000 barrier amidst rising prudence ahead of the release of the FOMC Minutes on Wednesday.
Gold price slips on Middle East truce calls, clings above $2,600
Gold prices slumped sharply on Tuesday following a strong US jobs report and newswires revealing that Hezbollah supported calls for a truce in the conflict between them and Israel. Hence, hints of a possible de-escalation of the Middle East conflict opened the door for traders to book profits.
RBNZ seen cutting key interest rate by 50 bps in October amid deepening economic downturn
The Reserve Bank of New Zealand is expected to cut interest rates by 50 bps to 4.75% on Wednesday. New Zealand’s deepening economic downturn and inflation optimism flag outsized RBNZ rate cut bets.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.