The foreign exchange reserves rose by US$0.64bn or RM2.1bn in 1H June to US$96.1bn or RM314.3bn as at 15 June, compared with a decline of US$0.6bn or RM2.0bn in 2H May. This suggests that the repatriation of export proceeds was more than enough to offset some outflow of foreign portfolio funds and payment of import bills. As it stands, the foreign portfolio investment in fixed income papers slowed down to RM8.5bn in April, from +RM12.9bn in March and we expect it to fall in May. Meanwhile, total holdings in fixed income instruments by foreign portfolio investors rose to RM93.7bn at end-April, the highest in 21 months and from RM85.2bn at end-March (Chart 1). At the current level, the foreign exchange reserves are sufficient to finance 8.2 months of retained imports and cover 4.4 times the short-term external debt of the nation, compared with a high of 10.0 months of retained imports and 4.3x of short-term external debt cover as at end-February.
Economic Highlights - Foreign Exchange Reserves Rose To US$96.1bn As At - 23/6/2010
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