Friday 29 Mar 2024
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KUALA LUMPUR (Oct 8): Bank Negara Malaysia's global reserves may fall within the US$85 billion–US$90 billion range by end-2015 from US$116 billion a year earlier on expectation that the US will raise interest rates in 2015, Affin Hwang Investment Bank Bhd said.

In a note today, Affin Hwang said it had maintained its forecast on Bank Negara's international reserves as the research firm foresaw near-term currency volatility.

Bank Negara sells its foreign reserves to buy the ringgit in order to support the Malaysian currency, which had weakened to 4.2230 against the US dollar today. This compares to the strongest level at 3.2330 over the last one year.

As such, Bank Negara's international reserves offer clues on how much ammunition the central bank has to support the ringgit, which tracks crude oil prices.

Affin Hwang said, "Ringgit recovered from RM4.45/US$ on Oct 2 to RM4.22/US$ as at Oct 7, 2015, a 4.7% improvement over three trading days."

"Nevertheless, we believe the currency movement will likely remain volatile in the near term. However, we continue to expect ringgit to move towards the range of RM3.90–RM3.95 against the US$ by end-2015," it said.

Yesterday, Bank Negara announced that its international reserves fell to US$93.3 billion as at Sept 30, 2015 from US$95.3 billion as at Sept 15.

However, the reserves, in ringgit terms, rose to RM415.1 billion as at Sept 30 from RM360.1 billion as at Sept 15. Bank Negara said the reserves had fallen in US-dollar terms on foreign exchange revaluation adjustments.

 

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