Fitch maintains Malaysia's rating at 'A-' with stable outlook

Fitch Ratings has maintained Malaysia's rating at 'A-' with stable outlook.

In a statement today, its Associate Director, Sovereign Ratings, Sagarika Chandra, said Malaysia’s external liquidity position has deteriorated because of large capital outflows and loss of foreign exchange reserves.

However, he said, the external liquidity (as measured by Fitch’s broader external liquidity metric) still remained above the ‘A’ median.

Sagarika said given the large share of non-resident holdings of Malaysian Government Securities, Malaysia remained vulnerable to a shift in investor sentiment, following the US Federal Reserve (Fed) rate increase.

The Fed on Wednesday raised interest rate for the first time in nearly a decade by 0.25 percentage point on Wednesday.

Nevertheless, he said, a flexible exchange rate and large gross external assets would continue to cushion Malaysia’s vulnerability to such an event.

Additionally, Sagarika said, the ability of domestic agencies, such as the Employees Provident Fund, to provide funding in the event of a sell-off by non-residents, was expected to continue to support the domestic funding needs.