- The international reserves of BNM amounted to USD100.5bil (or -4.7% from end-June) as at 15 July 2015. On a YTD basis, the reserves had contracted by 13.3% (or -USD15.4bil).

- The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt.

- The Ringgit remained weak vis-à-vis the Greenback during the 1H of July. Ringgit hovered at an average of 3.79 per USD during the 1H of July which was weaker compared to June’s average of 3.74.

- Monetary policy will remain accommodative for the rest of the year in support of growth in a stable price environment.

- Although prices were on the rise and the Ringgit currency stayed relatively weaker against major currencies, the overall economy had probably slowed in 2Q15 due to the GST.

- Despite steady loans growth of 8.9% in May 2015 vs. 8.8% in April, household spending softened amid weak domestic sentiment and higher prices.

- Loans growth for the household segment grew, albeit at a slower pace of 9.0% YoY in May vs. 9.4% in April, on the back of higher prices and cautious spending.

- We do not anticipate any changes in the OPR in 2015. The benchmark interest rate is likely to remain unchanged at 3.25%.

- Overall, the positive real interest rate environment remains attractive for international carry trades. In June, real interest rate stood at +0.75% as inflation rate was at 2.5% YoY.

- Global holdings of Malaysia’s government bonds surged to an all-time high in June. When included both conventional and Islamic sovereign bonds, global holdings rose to 32% of total outstanding government bonds (vs. 31.2% in May).

- As for the interest rate in the US, Yellen said during her semi-annual report on the economy to the Senate Banking Committee that the Federal Reserve is "highly focused" on the risks of raising interest rates too early.

- Economists’ outlook for the first Federal Reserve rate rise remains intact even as crises in Greece and China rocked global financial markets and dimmed global economic prospects.

- That said, a survey by Bloomberg on 20-22 July showed that odds for a September liftoff remain at 50%, exactly where they were in June.

- Consensus estimate in the US assigned 40% odds to a later move and does not expect a rate hike when the FOMC gathers on 28-29 July.

Source: AmeSecurities Research - 24 Jul 2015