• Foreign reserves rose marginally by US$0.1bn in 2H April 2009.  Bank Negara Malaysia's (BNM) foreign exchange holdings rose slightly by US$0.1bn in 2H April 2009 to US$87.73bn as at end-April from US$87.64bn as at 15 April 2009.  For the full month, it declined by US$0.1bn from US$87.8bn.  The current reserves position is sufficient to finance 8.1 months of retained imports and is 4 times the short term external debt.
• Portfolio outflows subsided while trade surplus remains strong.  The slight uptick in foreign reserves reflects the subsiding net outflows of portfolio investments.  The rally in the KLCI in April by 118.19pts to 990.74pts suggests a possible renewal of foreign interest in the stock market.  In April, the ringgit appreciated by 2.5% against the US dollar to close at RM3.559/US$ at end-month.  The ringgit also appreciated by 2% against the euro and 2% against the yen in the month.  Meanwhile, the continued trade surplus also supported external reserves.
• External reserves to stabilise.  With portfolio outflows easing and possibly reversing direction, while the trade balance remains in surplus, we think foreign reserves will stabilise going forward.  We estimate foreign reserves to come in between US$87bn and US$90bn by end-2009 (US$91.4bn at end-2008).
• Ample liquidity in the system.  As at end April 2009, the amount of excess liquidity mopped up by BNM rose to RM221.3bn (RM216.8bn as at end-March).  The large build-up of excess liquidity over the previous years, gives BNM the capacity to recycle the excess liquidity back into the system should domestic liquidity conditions tighten.

Please find attached the article by Mr Lee Heng Guie _^here

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