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UOB : Malaysia Capital Outflow

(Mon, 9 Mar 2020). UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest figures of foreign portfolio flows in Malaysia.

“Malaysia’s foreign portfolio flows posted the largest net outflows in 10 months at MYR10.0bn in Feb (Jan: +MYR3.4bn). This was mainly triggered by emergence of COVID-19 fears and recent political uncertainties. The slide in foreign portfolio flows into Malaysia is in line with the sharp pullback in portfolio flows into emerging markets.”

“The substantial drop in Feb’s foreign portfolio flows resulted in a 2.8% m/m depreciation in the MYR against the USD last month. Bank Negara Malaysia’s foreign reserves dropped 0.7% m/m to USD103.4bn as at end-Feb (end-Jan: USD104.2bn). The current reserves position is sufficient to finance 7.4 months of retained imports and is 1.1 times short-term external debt.”

“USD/MYR hovers at 4.18 with support from CNY and weaker USD. Focus remains on COVID19 developments and potential US Fed rate cut at the next scheduled meeting on 17-18 Mar. This follows the US Fed’s unscheduled 50bps rate cut on 3 Mar and IMF’s announcement that USD50bn is available through its emergency financing facilities for low income and emerging market countries that seek financial support. Major central banks pledged to stabilise financial markets and G7 countries announced they will use all appropriate tools to tackle the impact of COVID-19.”

 

 

GFS ASIA TEAM

 

 

 

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