BNM's New Measures Will Increase Malaysia's Forex Reserves, Says Affin Hwang

KUALA LUMPUR, Dec 5 (Bernama) -- Bank Negara Malaysia's (BNM) or Central Bank of Malaysia's new measures on the treatment of export proceeds, is important to build and accumulate possible higher foreign exchange (forex) reserves, especially in the US dollar. In a note, Affin Hwang Investment Bank Bhd said foreign currencies held by exporters, is estimated to be close to RM90 billion. "With the BNM measures in place, we believe repatriation and conversion of the trade surplus by exporters from foreign currencies to the ringgit, will assist in raising international reserves, and support the country’s economic fundamentals," it said. As at Nov 15 this year, BNM’s international reserves continued to increase gradually on a monthly basis to RM405.5 billion (US$98.3 billion) from RM390.4 billion (US$97.2 billion) as at end-June this year. Affin Hwang said the central bank's pre-emptive move is expected to provide a safeguard against further weakness in the ringgit, as well as prevent excessive speculation in the forex market. Meanwhile, Affin Hwang has projected the ringgit to appreciate gradually against the US dollar to about RM4.10 to the greenback by end-2017, from RM4.45 against currently, considering Malaysia's healthy macro fundamentals. "However, US president-elect Donald Trump's unpredictability in foreign and trade policy, as well as a possible sharper-than-expected US Federal Reserve interest rates hike may put some downside risk to our projection on the ringgit," it added. Effective Monday, BNM's new measures include liberalisation and deregulation of the onshore ringgit hedging market, streamlining treatment for investment in foreign currency assets, as well as, incentives and treatment of export proceeds. (US$1 = RM4.44) -- BERNAMA