The forex reserve of Malaysia continues to decline in October, 2018 to the lowest level in a year due to the portfolio outflows. It is said that the forex reserve of the country have dropped by US$1.3billion to US$103billion at 31st October from US$103billion at the end of September. This is the result of the portfolio outflows that offset the continued accumulation of excessive in the present account.
It also said that the forex reserve of Malaysia have declined from RM5.5bil to RM421.5billion by the end of October after it increased by RM4.5billion in the month of September. RHB Research have stated that at present level, the reserves are enough to finance 7.5 months of the retained important, the similar rate from last year.
Nonetheless, the reserves have covered 0.9 times the short-term external debt of the nation which is deteriorating from 1.1 times from last year. Like it stands, the Malaysian equity market have recorded a net outflow of RM1.4 billion in October vs. the marginal RM66million last month as the regional equity market suffered the broad selldown during that month.
On currency front, the ringgit has recovered mildly by 0.3% vs. US$ to RM4.172 in 1st week of November after it had weakened by 1% in the month of October amongst prospects of trade war de-escalation. Till now, the ringgit is 2.6% weaker, especially on the back of a stronger US$ as investors have flocked to safety amongst the continued tightening of the monetary policy by Federal Reserve of US.
RHB Research has said that ringgit is expected to continue being weak in the coming week prior to settling at RM4.10 by the end of 2018. The emerging currency markets have experienced a greater volatility after the Turkish lira crisis, the volatility has subsided contagion effects on ringgit seem to be contains as the economic fundamentals keep on being strong.