Malaysia’s confidence in withstanding capital in-flows

As Asian nations take the necessary steps to prevent asset bubbles after the U.S. boosted stimulus, Central Bank Governor Zeti Akhtar Aziz has reassured the Malaysian community by saying that;

 ‘Malaysia can manage capital inflows due to monetary easing in advanced economies.’

Governor Zeti, speaking with confidence

Zeti who oversaw the Malaysian response to capital outflows during the Asian financial crisis more than a decade ago, also said;

‘The country has the tools and flexibility to absorb any excess liquidity.’

Zeti spoke confidently and this is because of the good news that the Malaysian economy is withstanding the impact of weakening global growth, with the gross domestic product forecast to expand about 5 percent this year.

The Malaysian Ringgit is also very strong; I personally remember the currency being over seven Ringitt to just one pound sterling around 5 years back. We are now looking at a conversion rate of around RM4.9 to GBP1.

Due to the Malaysian financial system reaching new levels of maturity in terms of development and its functioning, the cash flows that Malaysia are in receipt of, can be intermediated.

This is in regards to both surges of inflows and reversals. All these effects are disbursed through the financial system rather than concentrated.

Malaysia are not the only country confident of this; Brazil has also signaled confidence that it can counter any surge in flow stemming from the U.S Federal Reserves QE3.

I hope that you have enjoyed reading this post.

Stuart Yeomans 


Farringdon Group

Kuala Lumpur : Malaysia

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