Economic Highlights : Foreign Exchange Reserves Fell To US$94.8bn As At 30 June - 07/07/2010

The foreign exchange reserves fell by US$1.34bn or RM4.6bn in 2H June to US$94.8bn or RM309.8bn as at 30 June, a reversal from an increase of US$0.64bn or RM2.1bn in 1H June. This suggests that the repatriation of export proceeds was offset by some outflow of foreign portfolio funds and payment of import bills. A loss due to the revaluation of the foreign exchange reserves, following the strengthening of the ringgit against major currencies during the quarter, worsened the situation. Meanwhile, the foreign portfolio investment in fixed income papers slowed down sharply to RM0.1bn in May, from RM8.5bn in April and a high of RM12.9bn in March. As a result, total holdings in fixed income instruments by foreign portfolio investors remained relatively stable at RM93.8bn at end-May, compared with RM93.7bn at end-April and RM85.2bn at end-March (Chart 1). At the current level, the foreign exchange reserves are sufficient to finance 8.1 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 Fell To US$94.8bn As At 30 June - 07/07/2010