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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest performance of foreign funds in the Malaysian economy.

Key Quotes

“Foreign funds sold MYR1.5bn of Malaysian bonds and equities in May. The selling ebbed with a reversal to purchase MYR1.5bn of Malaysian bonds as flows returned to the region amid reopening optimism and carry-trade flows. However, foreigners continue to sell MYR3.0bn of equities which was offset by strong domestic retail participation.”

“Bank Negara Malaysia’s foreign reserves rose US$0.4bn m/m to US$102.9bn as of end-May. The latest foreign reserves position is sufficient to finance 8.1 months of retained imports and is 1.1 times short-term external debt.”

“While the MYR has rallied modestly with the pick-up in global risk appetite from 4.35 /USD in early June to about 4.27 /USD, further gains from here may take on a more measured pace. Key risks include a renewed spike in infections that may trigger tightening of movement restrictions and escalating US-China tensions.”

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