KUALA LUMPUR – Short-term rates are expected to remain stable next week on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the cash market.
This week, the average Islamic overnight interest rate remained pegged at 1.72%, while the one-, two- and three-week rates stood at 1.78%, 1.81%, and 1.85% respectively.
The central bank intervened on a daily basis to reduce excess funds from the financial system by conducting conventional money market tenders, Qard tenders, range maturity auction tenders, repo tenders, commodity murabahah tenders and reverse repo tenders.
The total liquidity surplus in the conventional system for the week declined to RM30.81 billion from RM36.41 billion in the preceding week, while in the Islamic system, it rose to RM20.20 billion from RM18.46 billion previously.
Meanwhile, the gold futures contract on Bursa Malaysia Derivatives is likely to trade range-bound due to the uncertain economic outlook, said a dealer.
Phillip Futures Sdn Bhd dealer Tan Kien Kiong said the US COMEX gold futures are expected to trade lower next week as some investors remained on the sidelines on rising US consumer prices.
Another analyst said that for now, traders will be watching whether transitory inflation passes through into more substantial and persistent inflation.
Wage increases and long-run inflation expectations are likely to remain in focus, he said.
The local gold futures market remained unchanged for the whole week with no volume traded.
On a Friday-to-Friday basis, Bursa Malaysia’s gold futures contract for June 2021 remained at RM225 a gramme, July 2021 was pegged at RM230.0 a gramme, while August 2021 and September 2021 stood at RM255 a gramme respectively.
Volume remained nil while open interest stood at eight contracts.
Meanwhile, the price of physical gold rose RM2.02 to RM242.14 a gramme from the previous Friday’s RM240.12 a gramme. – Bernama, June 12, 2021
