ECONOMIC UPDATE

8 March 2016

Reserves at BNM remain steady at USD95.6bil in

February 2016

Patricia Oh Swee Ling

patricia-oh@ambankgroup.com
603-2036 2240

Summary
According to data released by BNM yesterday, the international reserves of Bank Negara Malaysia had amounted to USD95.6bil
(which is equivalent to RM410.5bil) as at 29 February 2016. The reserves position is sufficient to finance 8.3 months of retained
imports and is 1.2 times the short-term external debt. It had advanced by USD100mil (or +0.1% MoM) which is also an increase of
RM402.7mil (or +0.1% MoM) in Ringgit terms. We gather that the Ringgit had appreciated in the recent months, as it advanced
further to close at 4.21 per USD (or +2.1% YTD) as at end-February 2016 vs. 4.29 as at end-December 2015.

Key Highlights

Reserves at BNM remained steady in February 2016. International reserves at BNM advanced by USD100mil (or +0.1%
MoM) to USD95.6bil in February 2016. In Ringgit terms, reserves had improved by RM402.7mil (or +0.1% MoM) to RM410.5bil.
We gather that the Ringgit had appreciated in the recent months, as it advanced further to close at 4.21 per USD (or +2.1%
YTD) as at end-February 2016 vs. 4.29 as at end-December 2015

XXX

Asian currencies appreciated as at YTD 2016. Based on last Fridays closing, JPY was the best performer among the
regional currencies, registering a gain of 5.4% YTD to close at JPY
113.74
Xxx per USD. Ringgit had also advanced by 4.0% YTD
2016. Meanwhile, GBP, KRW and INR are worst performers this year, as these currencies had depreciated against the
Greenback in 2016.
Xxx
Considerably gains for the Ringgit in 2016. Ringgit has outperformed many regional currencies during 1Q16, except for
stronger appreciation of JPY and IDR against USD. Nonetheless, Ringgit has remained relatively undervalued compared to
other regional currencies considering the lacklustre Ringgit performance last year. Ringgit had depreciated by 23% compared
to the dollar in 2015, closing at RM4.29 per USD as at 31 December 2015. Given the 4.0% appreciation of the Ringgit as at
YTD 2016, still, the Ringgit remains 19% lower compared to end-2014.
Uncertainties for the US economy and further downward pressure on USD. Despite the increase in non-farm payrolls and
unchanged unemployment rate of 4.9% during the month of February 2016, the initial jobless claims in the US had
unexpectedly increased by 6,000 to 278,000 in the week ended 26 February 2016. That said, inflation rate in the US continued
to trend higher in January 2016 with core PCE at +1.7% YoY while PCE advanced by 1.3%, which are within the Feds
projection currently. Note that the Fed expects full-year core PCE and PCE to register growth rates of between 1.5-1.7% and
1.2-1.7% in 2016, respectively.
Malaysias exports deteriorated in January 2016. Exports fell by 2.8% in January 2016 vs. +1.4% in December 2015, due to
the stronger-than-expected Ringgit, weak crude oil prices and slowdown in global demand. The global economy is poised to
grow at a moderate pace while indicators for major economies suggest ongoing weaknesses in terms of external demand for
Malaysias major trade counterparts. That said, Malaysias GDP growth probably tapered in 1Q15 on slower trade balance and
softer domestic growth.

8 March 2016

Economic Update

CHART 1 : INTERNATIONAL RESERVES AT BNM

USD mil

MYR/USD (RHS)

150,000

5.00

140,000

4.50

130,000

4.00

120,000
3.50
110,000
3.00

100,000
90,000

2.50

80,000

2.00

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Sources: Bloomberg / AmInvestment Bank Bhd

CHART 2 : PERFORMANCE OF REGIONAL CURRENCIES AGAINST USD

YTD 2016

2015

JPY
IDR
MYR
SGD
AUD
THB
EUR
PHP
HKD
CNY
INR
KRW
GBP

HKD
JPY
CNY
PHP
INR
GBP
SGD
KRW
THB
IDR
EUR
AUD
MYR

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

Notes: Chart 2 depicts the performance of regional currencies against the greenback. Positive territory indicates appreciation of currencies against USD, while negative territory
suggests depreciation of currencies.
Sources: Bloomberg / AmInvestment Bank Bhd

AmInvestment Bank Bhd

Economic Update

Published by
AmInvestment Bank Bhd (23742-V)
(A member of the AmBank Group)
15th Floor Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Tel: ( 0 3 ) 2 0 7 0 - 2 4 4 4 ( r e s e a r c h )
Fax: (03)2078-3162

8 March 2016

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this
report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a
solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd may from time to time have a position in or with
the securities mentioned herein. Members of the AmBank Group and their affiliates may provide services to any company and affiliates of
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reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not
represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise
from the use of this report. All opinions and estimates included in this report constitute our judgement as of this date and are subject to
change without notice.

Printed by
AmInvestment Bank Bhd (23742-V)
(A member of the AmBank Group)
15th Floor Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Tel: ( 0 3 ) 2 0 7 0 - 2 4 4 4 ( r e s e a r c h )
Fax: (03)2078-3162

For AmInvestment Bank Bhd

Benny Chew
SR VP Equity Research

AmInvestment Bank Bhd