Fitch Upgrade Gives Fillip To Ringgit, Bursa

KUALA LUMPUR, July 1 (Bernama) -– The surprise announcement from international ratings agency, Fitch Ratings, which revised the Malaysian outlook to stable, has provided a big relief to local markets, and put paid to earlier fears of a likely downgrade. The ringgit opened sharply higher, up 385 points or 0.97 per cent against the US dollar Wednesday morning, bolstered by strong demand for the local note after the positive announcement by Fitch. At lunch break, the local note stayed firm at 3.7355/3.7395 to the greenback compared to 3.7740/7770 at 5 pm Tuesday. On the equity market, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) surged 30.56 points, or 1.79 per cent, to 1,737.20 at mid-day, lifted by plantation and consumer bluechips. Bank Islam Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid said the news should provide some relief to the hitherto jittery markets over a possible Fitch downgrade on Malaysia. “We are heartened by Fitch’s conviction on the state of Malaysia’s current account balance which is being associated with the rise in investment activities. “This would strengthened the rating profile since the government is expected to spend more in infrastructure projects as indicated in the Eleventh Malaysian Plan (11MP),” he told Bernama Wednesday. Fitch in its latest rating affirmed the country's long-term foreign currency rating at A- and revised upwards its outlook to stable from negative. The rating agency said it viewed the progress on the Goods and Services Tax and fuel subsidy reform as supportive of fiscal finances. A further narrowing of the deficit is forecast this year despite lower oil prices. It noted that the depth of Malaysia's local capital markets supports the sovereign's domestic financing needs. -- BERNAMA