At 9am, the local currency rose to 4.3960/4.4000 against the greenback from 4.4030/4.4060 at 6pm on yesterday.
“This improvement (the positive revision) surely strengthened investors’ sentiment and confidence in Malaysia’s economy,” an analyst told Bernama.
In its latest report on Malaysia, S&P foresees the country’s GDP will grow at 6.1% in 2022 and 5% in 2023.
The steady growth momentum is supported by high commodity prices, strong exports and domestic demand with the reopening of the economy.
Additionally, S&P affirmed the “A-” rating for long-term and “A-2” for short-term foreign currency sovereign credit ratings, as well as Malaysia’s “A” rating for long-term and “A-1” for short-term local currency ratings.
“The stable outlook reflects our expectation that Malaysia’s steady growth momentum and strong external position will remain in place over the next two years,” the rating agency said in a statement.
“At the same time, we anticipate that the policy-making environment will be supportive of restoring fiscal settings to a firmer footing,” it added.
Yesterday, Finance Minister Tengku Zafrul Abdul Aziz was reported saying that the “stable” rating outlook was made as S&P believes the country is on a strong economic recovery path.
He also said the GDP forecast of 6.1% is in line with the government’s expectation of higher growth over the subsequent quarters and in line with the higher end of Bank Negara Malaysia’s official estimate of 5.3% to 6.3%.
In a note today, MIDF Investment said the 2022 forecast and S&P’s optimistic view were in line with its projected outlook, where it expects Malaysia’s economy to grow at an average rate of 6% on the back of a strong external sector, elevated commodity prices and robust domestic demand.
“Even though there is the risk of a spike in food inflation, the overall price pressure will remain stable amidst the cap on retail prices for RON95 petrol and diesel.
“As long as the average headline inflation does not surpass 3% year-on-year, we believe domestic spending will remain on an upward trajectory for this year and 2023,” it said.
Meanwhile, the ringgit was traded firmer against a basket of major currencies.
It appreciated versus the Singapore dollar to 3.1726/3.1760 from yesterday’s close of 3.1779/3.1805, and rose against the Japanese yen to 3.2450/3.2482 from 3.2564/3.2589 yesterday.
The local currency also strengthened against the British pound to 5.3952/5.4001 from 5.4064/5.4101 and advanced vis-a-vis the euro to 4.6501/4.6543 from 4.6535/4.6567 yesterday.