Sunday, December 21, 2014

Monetary & Financial Developments








Price Conditions: Headline inflation, as measured by the annual percentage change in the Consumer Price Index (CPI), was 2.8% in October 2014 (September: 2.6%). The increase mainly reflected the upward adjustments to prices of RON95 petrol and diesel during the month, which translated into a 5.3% price increase in the transport category (September: 0.5%). However, the increase in inflation was partially mitigated by lower inflation in the tobacco sub-category, following the downward revision in the prices of cigarette, as well as the slower increase in prices of food at home, which partly reflected the implementation of the festive season price control scheme by the Government.

Monetary Conditions Interbank rates were relatively stable in October. In terms of retail lending rates, the average base lending rate (BLR) of commercial banks was stable at 6.79%. Retail deposit rates were broadly unchanged over the period. On an annual basis, broad money (M3) grew by 5.4% in October. M3 grew mainly on account of credit extension to the private sector by the banking system. Net financing to the private sector grew at a slower pace of 8.6% in October, due to a moderation in the growth of net issuances of private debt securities (PDS) amidst stable growth in outstanding banking system loans. The annual growth of outstanding business loans increased during the month with a larger volume of loans extended mainly to the construction; manufacturing and finance, insurance and business services sectors. The annual growth in outstanding household loans, however, continued to moderate. Overall loan demand remained relatively stable with sustained loan applications from households.

Banking System: Banking system capitalisation remained at strong levels with the Common Equity Tier 1 Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio at 12.8%, 13.5% and 15.5% respectively. The level of net impaired loans was sustained at 1.3% of net loans while the loan loss coverage ratio remained above 100%.



Exchange Rates and International Reserves: In October, the ringgit exhibited a mixed performance against the currencies of Malaysia’s major trade partners. The ringgit, together with other regional currencies, depreciated against the US dollar during the month following a sharp increase in global risk aversion, which led to some unwinding of foreign holdings of regional financial assets. The heightened market uncertainty was mainly driven by concerns over the global growth momentum as the IMF and some national authorities revised their growth outlook lower. In the period between 1 and 14 November, the ringgit exhibited a mixed performance against the currencies of Malaysia’s major trade partners. The international reserves of Bank Negara Malaysia amounted to RM414.5 billion (equivalent to USD126.6 billion) as at 14 November 2014, sufficient to finance 8.7 months of retained imports and are 1.1 times the short-term external debt.





Sumber: Diterbitkan oleh: Jabatan Komunikasi Strategik, Tingkat 14, Blok B , Bangunan Bank Negara Malaysia, Jalan Dato’ Onn, 50480 Kuala Lumpur, Malaysia. Telefon: + 60(3 ) 2698 8044 Faksimili : + 60(3 ) 2693 6919 Web: www.bnm.gov.my