Fitch keeps Malaysia’s rating at A- with Stable outlook

Fitch says the Employees Provident Fund will provide funding in the event of a sell-off by non-residents.

KUALA LUMPUR: Fitch Ratings is keeping Malaysia’s rating at A- with Stable outlook as external liquidity position deteriorated due to large capital outflows, loss of forex reserves. 

Fitch Ratings associate director, sovereign ratings, Sagarika Chandra said however, external liquidity, measured by Fitch’s broader external liquidity metric) still remains above the “A” median.

“Given the large share of non-resident holdings of Malaysian Government Securities (MGS), Malaysia remains vulnerable to a shift in investor sentiment, following the Fed rate hike,” he said. 

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

“Additionally, the ability of domestic agencies – such as the Employees Provident Fund (EPF), to provide funding in the event of a sell-off by non-residents, is expected to continue to support the sovereign’s domestic funding needs,” he said.