Bank Negara Malaysia (BNM) international reserves rose by US$2.9 billion, or 2.5% month-on-month (MoM), reaching US$119.7 billion as of 30 Sep 2024, the highest level since November 2014, according to Kenanga Investment Bank Bhd (Kenanga Research).
The rise in the reserves was primarily driven by a sharp increase in foreign currency reserves, gold, and special drawing rights, bolstered by foreign exchange (forex) revaluation gains.
Other reserve assets and International Monetary Fund reserve positions remained relatively unchanged.
In ringgit terms, the value of BNM’s reserves fell sharply to RM491.6 billion, owing to a 10.7% reduction MoM, as the ringgit appreciated during the quarterly revaluation. The ringgit recorded a strong RM4.12 per dollar last week, driven by the US Federal Reserve’s decision to implement a 50 bps rate cut in September, along with China’s expansive economic stimulus measures.
Kenanga Research has revised the 2024 year-end target back to RM4.25 per dollar from RM4.42 per dollar stated previously.
The strength of the ringgit has been further supported by encouraging domestic indicators and BNM’s decision to maintain its currently policy stance. With inflation pressures subdued and the economic outlook stable, BNM is likely to keep the overnight policy rate unchanged for the next 12 to 15 months.
Regional currencies largely appreciated after the US and China economic moves, with the Thai Baht leading the pack with a 4.3% gain, followed by the ringgit gaining 3.5%, Indonesian Rupiah 2.8%, the Filipino Peso 1.6% and Singaporean Dollar 1.5%.
