The global rating agency affirmed the country’s long-term foreign currency rating at A- and revised upwards its outlook on the long-term issuer default rating (IDR) to stable from negative.
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Bernama was made to understand that Fitch officials went to the ground to visit new development project sites including the Tun Razak Exchange at Jalan Imbi and Bandar Malaysia at the ex- Royal Malaysian Air Force Sungei Besi Air Base to ascertain the projects are true before determining its ratings.
Earlier this week, Wall Street analysts raised concerns that Malaysia was singularly vulnerable to a Grexit, because of large foreign, especially European, ownership in local currency debt.
The ratings agency also pointed out that the depth of Malaysia’s local capital markets is supportive of the sovereign’s domestic financing needs.
Wednesday’s decision, which surprised economists, liftedMalaysia’s benchmark stock index by 0.7 percent in earlytrade and the ringgit by 1 percent.
In a statement just before midnight on Tuesday, Fitch affirmed the country’s credit rating at “A-“, the fourth-lowest investment rating, and said Malaysia’s fiscal finances had improved since 2014, citing progress on a newly-introduced consumption tax and fuel subsidy reforms.
The narrowing current account was attributed to “a decline in the savings rate and a pick up in investments”.
Country is determined to maintain fiscal sustainability policy, says prime minister. “Fitch thinks there is a high probability that sovereign support for 1MDB would be forthcoming if needed”.
Against other major currencies, the ringgit was also traded higher. At present, the rupiah hasweakened more. It originally had a target of 3 percent in 2015, which was revised to 3.2 percent following the drop in globaloil prices.
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Investors’ confidence remains strong as seen in the over-subscription of Malaysia’s US$1.5 billion sukuk issuance in April 2015. Moody’s has a positive outlook, while S&P’s is stable.
