KUALA LUMPUR: Malaysia's foreign portfolio outflow widened in January, as foreigners net sold RM5.1 billion worth of debt securities.
The foreign outfllow stood at RM1.9 billion in December 2023, UOB Global Economics & Market research said.
It said January saw the largest net selling of bonds in 15 months.
"This is more than offset foreign net buying of Malaysian equities for a third straight month," it said in a note.
Foreigners net bought RM0.7 billion worth of Malaysian equities.
UOB said Bank Negara Malaysia's foreign reserves rose by US$1.3 billion month-on-month (mom) to US$114.8 billion as at end-Jan, after taking into account the quarterly foreign exchange revaluation changes.
It said the latest reserves position remains sufficient to finance 5.4 months of imports of goods & services and is 1.0 times the total short-term external debt. "Meanwhile, Bank Negara Maaysia's net short position in FX swaps narrowed by US$0.4 billion mom to US$23.6 billion as at end-Dec 2023 from US$26.4 billion at end-Dec 2022," it said.
Besides that, UOB said the recent strength in US economic data and affirmation from US Federal Reserve (Fed) Chair Jerome Powell that the Fed is not ready to begin rate cuts, has made a rate cut at the 19/20 Mar Federal Open Market Committee (FOMC) meeting unlikely.
It also said market repricing of Fed rate cuts has stirred volatility since the start of the year by lifting 10-year treasury yields to 4.12 per cent and the dollar index (DXY) to 104.
"Our view remains for the first Fed rate cut in June, followed by another in the third quarter (Q3) and Q4 (total of 75 basis point cuts this year).
"Despite a shaky start for Asia FX, we hold on to our view for US dollar weakness in the coming months once the rate cuts materialize.
"As such, we expect US dollar/RM at 4.75 in Q124, 4.65 in Q224, 4.55 in Q324 and 4.50 in Q424," it added.Ends