Saying that “the tide has changed” for Malaysia, the minister who oversees the influential Economic Planning Unit (EPU) has a positive outlook for the country.
“Foreign outflows have returned since April this year, out of which 10% of the money has come back into Malaysian government and central bank bonds.
“It is expected that more foreign outflows will return in the coming months, amid optimism by research houses, investment banks and fund managers such as BNP Paribas Investment Partners, Deutsche Bank, Western Asset Management and Fidelity International.
“They are of the view that Malaysia is on the right direction with the worst of foreign outflows behind us. What more, when the real economy has improved as shown in the first quarter GDP growth of 5.6%,” Rahman said in a statement yesterday.
He also praised Bank Negara Malaysia (BNM) for putting into place the right measures to protect the ringgit from currency speculation since last year.
Rahman said that BNM’s moves to the curb currency speculation by cracking down on the offshore ringgit trading market has paid off.
“Though foreign investors fled the market between late last year and the first quarter of this year after the central bank said they could no longer trade in ringgit non-deliverable forwards or NDFs, they are now coming back,” Rahman said.
He added that the measures by BNM were well thought out, with a proper plan in place “to develop the onshore forward market” by pumping about US$19 billion worth of cash into the foreign exchange trading system to improve onshore forward market liquidity.
“That is why the independence of Bank Negara is at all times crucial for it to conduct effective monetary and financial regulation policies.
“The government will continue to support BNM policies that are accommodative for Malaysia’s economic growth and financial markets,” Rahman said.