BNM Reserves Climb US$1.2 Billion Amid Capital Inflow And Ringgit Strengthening

BusinessToday

11-05-2025

Bank Negara Malaysia's (BNM) international reserves climbed by USD1.2 billion or 1.0% month-on-month (MoM) to USD118.7 billion as of April 30, 2025, providing a stronger buffer for the Malaysian economy amid global uncertainties.
According to a research note by Kenanga, this uptick lifted the country's import coverage to five months, up from 4.9 months in March, while the reserves-to-short-term external debt ratio remained stable at 0.9 based on 4Q24 data.
The increase was largely driven by a rebound in foreign exchange (FX) reserves, which rose USD1.0 billion to USD105.5 billion. This marks a recovery supported by renewed capital inflows into Malaysia. However, BNM's net FX reserves edged slightly lower in March to USD65.6 billion from USD66.1 billion in February.
Additionally, Malaysia's IMF reserve position increased by USD0.1 billion (+6.9% MoM) to USD1.3 billion — its first rise in 16 months — while other reserve assets also ticked up by USD0.1 billion (+3.6% MoM). Gold and Special Drawing Rights remained largely unchanged.
In ringgit terms, reserves expanded RM5.5 billion or 1.1% MoM to RM526.3 billion in April.
Ringgit Recovers Against Weaker Dollar
The ringgit traded within a volatile range of 4.32 to 4.50 against the US dollar during April, averaging 4.41 compared to 4.43 in March. It strengthened to below 4.40/USD in the final two weeks, buoyed by global risk aversion and waning confidence in US assets. The US dollar also weakened amid softer economic data, persistent US-China trade tensions, and renewed criticism of the Federal Reserve by former President Donald Trump.
Regionally, most Asian currencies appreciated against the greenback as the US Dollar Index (DXY) slipped sharply to 100.7 from 104.1 in March. The Philippine peso (PHP) and Singapore dollar (SGD) led regional gains (+1.0%), followed by the Malaysian ringgit (+0.5%) and Thai baht (+0.1%). The Indonesian rupiah (IDR), however, lagged with a 2.0% decline, marking its fourth consecutive monthly drop due to fading investor sentiment and concerns over domestic growth.
Monetary Policy Outlook: Steady for Now
Despite BNM's surprise cut to the Statutory Reserve Requirement (SSR), Kenanga notes that the Overnight Policy Rate (OPR) is expected to remain unchanged at 3.00% in the near term. The SSR reduction is seen as a liquidity management tool rather than a signal of broader monetary easing.
With inflation remaining moderate, growth steady, and financial conditions stable, BNM is likely to maintain its cautious stance. Market attention now shifts to the outcome of ongoing US-China tariff negotiations, which could have implications for global trade and monetary policy direction.
Kenanga maintained its end-2025 USDMYR forecast at 4.45 (2024: 4.47), although the ringgit could gain further ground if downside pressure on the US dollar continues. The research house cited stable domestic fundamentals and increasing foreign interest in Malaysian capital markets as supporting factors for the local currency. Related