Friday 29 Mar 2024
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KUALA LUMPUR (Aug 17): Foreign ownership of Malaysian government bonds fell to 23.7% in the second quarter of this year (2Q) amid concerns over the pace of the rate hike expectations by the US Federal Reserve, as well as the heightened trade tensions between the US and China, Bank Negara Malaysia (BNM) says.

"The large outflows among non-resident investors in the bond market was mainly due to external factors such as concerns over the pace of normalisation in the US, the trade conflict between the US and China, as well as a potential contagion from the development in Turkey," BNM Governor Datuk Nor Shamsiah Mohd Yunus told a press conference to announce the country's 2Q gross domestic product (GDP) growth today.

Nor Shamsiah added that a bulk of the outflow was seen in the early part of 2Q and has moderated.

Despite the decline, she noted that the distribution of non-resident holdings of the government bonds as at end-June consisted more of long-term investors, which help the country's bond market to be more stable.

The selldown in the bond market is also reflected in the performance of the ringgit against the greenback. Year to date, the ringgit has fallen by 0.9% against the US dollar.

Despite that, the governor pointed out that the ringgit has been more resilient compared with other regional currencies this year. Most of the regional currencies have fallen by between 1.8% and 9% against the US dollar.

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