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 Posté le: Lun Sep 16, 2013 8:50 pm Sujet du message: which stood at US$137.9bil |
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{ Malaysia among countries that are susceptible to capital outflows }
MALAYSIANS who need to exchange their ringgit for currencies of certain major developed economies – be it for holiday, education or business purposes – must have felt the pinch of late, as the ringgit has depreciated quite substantially against several major currencies in recent weeks. Against the US dollar, for instance, the ringgit had depreciated by about 7.6% year-to-date to 3.31 per unit as of noon yesterday. Against the British pound,[url=http://www.toms-shoes-sale.com]Toms Shoes Outlet[/url], on the other hand, the ringgit’s value had declined 3.7% to 5.16 while against the euro, the ringgit had depreciated by about 8.6% to 4.41 as of noon yesterday. Such phenomenon, though,[url=http://www.toms-shoes-sale.com]Toms Shoes Sale[/url], is not unique to Malaysia, as currencies of other emerging Asian economies have also shown similar trend of weakness against major-economy currencies in recent weeks. This trend is mainly attributable to the widespread capital withdrawal from emerging Asian economies back to developed nations – in particular, the United States. Contagion risk unfounded Clearly, Asia’s resilience to capital flight has now been put to the test once again,[url=http://www.toms-shoes-sale.com]Cheap Toms[/url], as widespread capital withdrawal from the region sends its financial markets into disarray. The broad-based sell-off in assets of Asian emerging markets (from equities to bonds) has led to significant decline in the values of the region’s currencies. Particularly hit hard have been India and Indonesia, which have seen their respective currencies, rupee and rupiah, crash over the week. The highly disruptive capital reversals from the region may have also tempted some punters to draw comparison between the current turbulence and the 1997/98 Asian financial crisis, but economists stress that such comparison is superfluous, as the current phenomenon is nothing like the previous predicament. “Asia’s economic fundamentals (now) are much stronger than in prior crisis periods (1997/98 and 2008/09) and they are backed by a more stable and better regulated financial sector,” CIMB Equity Research explains in its regional strategy note. Economists believe that some countries in the region will be able to withstand the effects of the current turbulence because of their strong fundamentals. Such is the case for Malaysia. The third-largest economy in South-East Asia has not been immune to the recent capital outflows, as evident in the movement of the ringgit, yet policymakers and economists alike believe that the country could be able to hold its ground. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, for one, has over the week assuaged concerns over the effects of destabilising capital flows on Malaysia by saying that the country has the strength and capability to manage the current volatility. Among others, Zeti says, Malaysia has strong and sound financial intermediaries operating in a well-developed market. She adds that the country’s robust foreign exchange reserves level, which stood at US$137.9bil (RM456.5bil) as at Aug 15, and low levels of foreign-currency debt at around 1% to 2% of the country’s gross domestic product (GDP) should also serve to protect Malaysia from the impact of disruptive capital flows. “We had demonstrated our ability to handle such weakness at the height of the global financial crisis in 2008/09 ... we would be able to do the same in the current environment,” Zeti says. Indeed, after being wrecked by the 1997/98 Asian financial crisis, Malaysia, along with some other regional economies, have emerged stronger with a better and sound financial system. CIMB Investment Bank chief economist Lee Heng Guie tells StarBizWeek: “At the moment, we do not see a high risk for Malaysia amid the current capital outflows. This is because the country has a flexible currency exchange rate and a strong balance sheet.” Lee also stresses that Malaysia’s strong foreign reserves, high national savings and low external debt would enable the country to absorb external shocks and reduce risks of external financing sustainability. The ringgit has depreciated against the US dollar in recent weeks but such phenomenon is not unique to Malaysia, as currencies of other emerging Asian economies have also shown similar trend of weakness against major-economy currencies.
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