KUALA LUMPUR (Oct 4): Bank Negara Malaysia (BNM) said Malaysia’s pre-determined short-term foreign currency outflow is seen at US$9.4 billion (about RM43.69 billion) over the next 12 months.

“Projected foreign currency inflows amount to US$2.04 billion (USD2,044.9 million) in the next 12 months,” BNM said in an updated statement which was initially issued on Friday (Sept 30) on the detailed disclosure of Malaysia’s international reserves as at end-August 2022.

BNM's latest projection of Malaysia’s pre-determined foreign currency outflow at US$9.4 billion over the next 12 months is higher than the previous estimate announced on Aug 30, 2022.

On Aug 30, BNM said in a statement that Malaysia’s pre-determined short-term foreign currency outflow was seen then at US$8.48 billion, while the country’s projected foreign currency inflow was estimated at US$2.16 billion.

According to BNM’s statement on Friday, Malaysia’s pre-determined short-term outflow of foreign currency loans, securities and deposits include the scheduled repayment of external borrowings by the Malaysian Government and matured foreign currency-denominated BNM interbank bills.

“In line with the practice adopted since April 2006, the (foreign currency inflow) data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans,” BNM said.

BNM's higher projection for Malaysia’s pre-determined foreign currency outflow over the next 12 months comes at a time when the ringgit has weakened past 4.65 against a strengthening US dollar as foreign exchange markets took their cue from higher US interest rate prospects to fight inflation, and as investors evaluated the possibility of an escalation of the Russia-Ukraine war.

Global inflation, interest rate hike and Russia-Ukraine war sentiments had led to a depreciation in world currencies including the ringgit against a strengthening US dollar, which saw higher demand from investors seeking higher returns from US interest rate hikes and as they sought safety in the US dollar, which is deemed a haven in times of geopolitical uncertainties.

Against the backdrop of the strong US dollar, BNM Governor Tan Sri Nor Shamsiah Mohd Yunus told Corporate Malaysia on Monday (Oct 3) that "there is no need to hoard [the US dollar] or frontload US dollar purchases" at a time when the ringgit's current depreciation is due to the strength of the US dollar.

Nor Shamsiah said BNM will ensure that Malaysia's onshore foreign exchange market remains liquid, so businesses can be assured that all their foreign currency needs can be efficiently fulfilled.