Risk of capital outflows expected to pressure Malaysian reserves in coming months

Kuala Lumpur

EVEN though Bank Negara Malaysia's (BNM) international reserves fell less than expected in November despite the central bank shoring up the ringgit during a period of volatility, analysts say the potential for capital outflows remains significant over the coming months owing to still-high levels of foreign ownership of Malaysian government securities (MGS) and the persistent strength of the US dollar.

On another level, increasing investor unease over corporate governance issues and the blowback from the 1MDB financial scandal are also exerting pressure on the ringgit.