Moody's upgrades Malaysia's foreign currency ratings

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Moody's Investors Service said today it has upgraded Malaysia's foreign currency ratings to reflect the country's resistance to economic turbulence.

Malaysia's foreign currency country ceiling was raised from Baa2 to Baa1 for debt and from Baa3 to Baa1 for bank deposits.

The ratings agency also upgraded the foreign currency-denominated bonds of the Malaysian government to Baa1 from Baa2 and the country's short-term foreign currency country ceilings to Prime-2 from Prime-3.

The outlook for all of the ratings is stable.

Moody's said the upgrades reflected Malaysia's "demonstrated economic resilience in the face of volatile external conditions," particularly in the electronics industry and the implementation in recent years of domestic corporate and banking sector reforms.

Remaining competitive

Despite a considerable decline in semiconductors and electronics, the country's largest export sector last year, it noted Malaysia's current account balance remained in substantial surplus.

At the same time, indicators of external liquidity have strengthened while reserves have remained strong and liabilities coming due have stayed at a low level.

Despite global economic uncertainties, Malaysia's prospects for export growth and stronger economic growth appear relatively good, it added.

The agency said Malaysia's stronger corporate and banking sectors would boost its competitiveness in the future, including its ability to attract higher foreign investment.

But it cautioned that as the country sought to remain competitive by wooing investment in its electronics industry, it must at the same time diversify away from dependence on that sector.

Rising government debt in recent years also made prospects for fiscal consolidation less certain, it said. — AFP



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