Friday August 31, 2012

RM12.9bil foreign currency inflow into M'sia in next 12 months

KUALA LUMPUR: Bank Negara is projecting foreign currency inflows amounting to RM12.88bil or US$4.12bil in the next 12 months due to interest income and the drawdown of project loans.

The central bank said in a statement that in the next 12 months, the predetermined short-term outflows of foreign currency loans would amount to RM1.07bil arising from scheduled repayments of external borrowings by the Government.

“The detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara over the next 12-month period,” the statement said.

Bank Negara said that data showed that only contingent short-term net drain on foreign currency assets are the Government's guarantees of foreign debt due within one year, amounting to RM351.2mil. The central bank said that long forward positions amounted to RM21.4bil as at end-July 2012.

“There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara also does not engage in foreign currency options vis-a-vis ringgit,” it said.

Meanwhile, Bank Negara said in separate statement that interbank rates were stable in July.

“In terms of retail lending rates, the average base lending rate (BLR) of commercial banks remained unchanged at 6.53% as at end of the month. Retail deposit rates were also relatively stable during the period,” it said.

Bank Negara also noted the annual growth in broad money (M3) increased at a higher annual rate of 13.5% in July. On a monthly basis, M3 increased on account of net portfolio inflows and sustained financing activity, it said.

“Net financing to the private sector grew 13.2% in July due to higher growth in outstanding banking system loans. Business loans outstanding expanded by 14.6% during the month with loans extended mainly to businesses in the transport, storage and communication; agriculture; manufacturing and construction sectors,” it said.

Bank Negara said loan demand remained robust with sustained loan applications, especially from households which were driven mainly by loans for the purchase of residential and non-residential properties, passenger cars and securities.

The banking system remained well-capitalised with risk weighted capital ratio and core capital ratio at 14.4% and 12.7% respectively, it said. “The decline in capital base was due to the redemption of subordinated debt capital by a bank. The level of net impaired loans remained stable at 1.5% of net loans, while the loan loss coverage remained high at 100.9%.”

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