Moody's Investors Service said today it has upgraded the outlook for Malaysia's Baa2 foreign currency ceiling for bonds to positive from stable.

The ratings agency also affirmed the Baa3 foreign currency ceiling for bank deposits to positive from stable due to Malaysia's continued strong balance of payments and external financial position.

"The country has maintained its financial position despite the difficult external environment last year amid a substantial decline in exports following the global decline in demand for electronics products," it said in a statement.

Moody's said Malaysia has also shown considerable resilience to adverse shocks and its vulnerability to future external shocks now appears to have lessened.

While there was some improvement in corporate governance on the local front, "changes are still less than fully transparent," the agency said.

It added the corporate sector could improve its competitiveness if these efforts are sustained.

Moody's said the future course of Malaysia's rating would be influenced the maintenance of its strong external financial position, further progress in corporate restructuring, political developments and trends in foreign investment.