Central Bank of Malaysia: Monthly Highlights - September 2017

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1. SIARAN AKHBAR Ref . No.: 10/17/08 EMBARGO: Not for publication or broadcast before 1500 hours on Tuesday, 31 October 2017 MONTHLY HIGHLIGHTS – SEPTEMBER 2017 Inflation increased in September  Headline inflation increased to 4.3% (August: 3.7%), driven mainly by higher domestic fuel prices. RON95 petrol price averaged at RM 2.19 per litre (August: RM2.12 per litre) amid higher refined oil prices. The higher global refined oil prices reflected the increase in crude oil prices following pent-up demand for crude oil as refineries in the U.S. resumed operations in the aftermath of Hurricane Harvey.  Nevertheless, underlying inflation, as measured by core inflation, remained stable at 2.4%. The ringgit was the best performing currency in the region  The ringgit appreciated against all regional currencies by 0.3% to 3.1% in September, supported by non-resident inflows of RM5.8 billion into the Government bond market.  The sustained growth in the external sector contributed to the positive outlook for the Malaysian economy, which attracted investor interest in both the bond and equity markets. Nevertheless, the gains in the equity market reversed towards the end of the month amid foreign selling following uncertainty over geopolitical developments. Net financing growth supported economic activity  Net financing growth was sustained at 6.6% in September (August: 6.6%). The growth of net outstanding issuances of corporate bonds increased to 10.9% (August: 9.0%), while the growth of outstanding loans of the banking system moderated to 5.2% (August: 5.8%).
2.  The moderation in loan growth was due mainly to the business sector (September: 5.8%; August: 7.2%), especially in the manufacturing; construction; and wholesale and retail trade, restaurants and hotels sectors. Higher overall IPI growth in August supported by mining activity  The overall industrial production index (IPI) recorded a higher growth of 6.8% in August (July: 6.1%), driven mainly by the larger expansion in mining production, despite the slight moderation in output in the manufacturing and electricity sectors.  The slight moderation in the manufacturing sector (7.6%; July: 8.0%) was attributed mainly to slower growth in the export-oriented industries. Sufficient liquidity in the banking system  Liquidity in the banking system remains supportive of banks’ financing activities. Aggregate surplus liquidity1 placed with Bank Negara Malaysia stood at RM189.4 billion.  All banks also maintained Liquidity Coverage Ratios above the regulatory requirement2 to meet unexpected cash outflows or adverse liquidity shocks. 1 Outstanding ringgit liquidity placed with Bank Negara Malaysia, including money market borrowings, repos, BNM debt securities held and statutory reserve requirement. 2 The minimum LCR requirement beginning 1 January 2017 is 80% following the transitional implementation. Bank Negara Malaysia 31 October 2017 Diterbitkan oleh: Jabatan Komunikasi Strategik, Tingkat 14, Blok B, Bangunan Bank Negara Malaysia, Jalan Dato’ Onn, 50480 Kuala L umpur, Malaysia. Telefon: +60(3) 2698 8044 Faksimili: +60(3) 2693 6919 W eb: www.bnm.gov.my