External reserves continued to improve for the fourth consecutive month. As at end?April 2017, reserves rose to US$96.11bil. However, on a y/y basis, it fell for the fifth consecutive month by 0.9%. Meanwhile, the pre? determined short?term outflows of foreign currency loans arising from scheduled repayment of external borrowings by the government would amount to US$277.9mil for the next 12 months. The short forward positions stood at US$19.1bil end?April 2017, reflecting the management of ringgit liquidity in the financial system.

We expect the outlook of reserves to remain favourable. Driven by improving economic conditions both domestically and the region, Malaysia will continue to enjoy some of the inflow of foreign funds into this region. Net inflow of foreign funds into the local bourse is at RM9.75bil YTD, while foreign holdings in MGS improved in April 2017 to 39.7% (RM141.6bil) from 38.5% (RM135.9bil) in March. We project the MYR to average around 4.31 to 4.33 for the full year of 2017. Our intraday range is 4.12 – 4.17 on the stronger end and 4.45 – 4.50 on the weaker end.

• External reserves continued to improve for the fourth consecutive month. As at end?April 2017, reserves rose to US$96.11bil from US$95.42bil as at end?March. Despite increasing in absolute terms, we found the level of reserves fell on a y/y/ basis for the fifth consecutive month by 0.9% end?April from 1.7%y/y end?March.

• Meanwhile, the pre?determined short?term outflows of foreign currency loans arising from scheduled repayment of external borrowings by the government would amount to US$277.9mil for the next 12 months.

• The short forward positions stood at US$19.1bil end?April 2017 from US$17.7bil end?March, reflecting the management of ringgit liquidity in the financial system.

• The only short?term net contingent liability that drains foreign currency assets is government guarantees of foreign debt due within one year which stands at US$130.0mil.

• We expect the outlook of reserves to remain favourable. Driven by improving economic conditions both domestically and the region, Malaysia will continue to enjoy some of the inflow of foreign funds into this region.

• Net inflow of foreign funds into the local bourse is at RM9.75bil YTD, while foreign holdings in MGS improved in April 2017 to 39.7% (RM141.6bil) from 38.5% (RM135.9bil) in March. We project the MYR to average around 4.31 to 4.33 for the full year of 2017. Our intraday range is 4.12 – 4.17 on the stronger end and 4.45 – 4.50 on the weaker end.

Source: AmInvest Research - 2 Jun 2017