Financial and monetary developments in Malaysia

Headline inflation, as measured by the annual percentage change in the Consumer Price Index (CPI), moderated to 2.6 per cent in March (February: 4.2 per cent), reflecting the lower fuel prices during the month.

Bank Negara Malaysia in a statement today said the price of RON95 petrol was reduced by 15 sen to RM1.60 per litre in March 2016 (February: RM 1.75; March 2015: RM1.95 per litre).

Meanwhile, interbank rates continued their moderating trend in March following the reduction of the Statutory Reserve Requirement (SRR) by 50 basis points on 1 February 2016. The average BR of commercial banks remained relatively stable at 3.89% in March.

In March, the ringgit appreciated against the currencies of Malaysia’s major trade partners. During the month, the ringgit, along with other regional currencies, appreciated against the US dollar.

This was mainly due to expectations that the increase in US interest rates would be deferred, which led to increased investment into regional financial markets. The ringgit, however, appreciated more than other regional currencies.

This was partly due to the increase in global crude oil prices during the month. The international reserves of Bank Negara Malaysia amounted to RM382.1 billion (equivalent to USD97.2 billion) as at 15 April 2016, sufficient to finance 8.1 months of retained imports and were 1.1 times the short-term external debt.