Malaysia: Sovereign rating reduced to BBB+ - UOB
UOB Group’s Senior Economist Julia Goh, Economist Loke Siew Ting and Head of Markets Strategy Heng Koon How, CAIA, reviewed the latest Fitch decision on Malaysia.
Key Quotes
“Fitch Ratings lowered Malaysia’s sovereign rating to BBB+ with a Stable outlook (from A- with Negative outlook). This was due to the negative impact of the COVID-19 pandemic on Malaysia’s fiscal position and the lingering political uncertainty which weighs on the policy outlook.”
“In an official statement, the Government of Malaysia expressed disappointment with Fitch’s decision, particularly during these exceptional times as the COVID-19 pandemic is still unfolding. The government reaffirmed the country’s strong recovery prospects, commitment to fiscal consolidation, and sound credit standing.”
“Once this uncertainty passes, our baseline expectations remains that of broad US Dollar weakness and China’s strong economic recovery to lead Asian currencies higher, including the MYR. Expectations of gradual recovery in crude oil prices amidst global economic reflation will also help reinforce the MYR. Overall, we maintain our view for USD/MYR to ease to 4.00 by end 2Q21 and 3.95 by end 4Q21.”
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
