Foreign exchange reserves rose to $95.3bn, Bank Negara Malaysia disclosed this week. This was higher than $94.7bn on 28 August. The central bank noted that the reserves are enough to finance 7.3 months of retained imports and are 1.1 times the country's short-term external debt.
Industry sources are however not convinced that shoring up on reserves will improve economic fundamentals and help stem the ringgit's downward spiral against the dollar.
Weak crude and palm oil prices have weighed on the ringgit over the past few months, while the tumult over graft allegations against Malaysian Prime Minister Najib Razak has dented investors' demand for Malaysian assets.
"Malaysia has been underperforming considerably in recent months due to falling oil prices, continuous political squabbling and the issues with 1Malaysia Development Berhad. All these factors have kept investors away from Malaysia, so with the US announcing that it will investigate the PM only adds to negativity," Nitin Dialdas, founder and CIO of Mandarin Capital told Fund Selector Asia.
"Cheap oil will continue to harm the economy which makes me believe that [the country] will underperform moving forward. I don't think political issues will be resolved anytime soon, so I find little reason to invest in Malaysia at this point," Dialdas added.
Standard Life Investments noted that Malaysia has seen stronger exports to China this year, but weak demand would disproportionately impact affected emerging countries, especially ASEAN nations that rely heavily on oil-based exports.
Malaysia's export volume, consisting mainly of commodities, raw materials and intermediate goods are up 3.7%, year-to-date.
"The prolonged slump in commodity prices is clouding the initial differentiation between winners and losers," Standard Life Investments said.
"The implications are important as emerging markets will no longer be able to rely on improving developed markets to lift them out of their malaise. With weakening growth across most of the developed world, emerging markets will be forced to rely on domestic drivers of growth rather than an external boost," Standard Life Investments added.