Malaysia on Monday said there was sufficient liquidity in the financial system and that it would not revise a six percent growth forecast amid the fallout over US subprime mortgages.
Monetary authorities are watching developments in the US which has triggered mayhem in the global financial markets, said central bank chief Zeti Akhtar Aziz. "We have the capacity to provide liquidity if the need arises."
Central banks in the United States, Europe, Australia, Japan and Canada injected massive funds into their financial systems to prevent a confidence crisis in global credit markets, spurred on by the crisis in the US. "Right now, we have sufficient liquidity in our financial system," she told reporters on the sidelines of a banking forum here.
"We are monitoring the situation but there is a high level of liquidity in our financial system. In fact, for several weeks, we have been absorbing liquidity," she added. Prime Minister Abdullah Ahmad Badawi meanwhile minimised the impact of the US crisis on Malaysia, stressing that GDP forecasts of 6.0 percent growth for the year would not be revised.
"We are not revising it and we don't need to do that," Abdullah said, adding the central bank had assured him that ample reserves and strong economic fundamentals would cushion any negative impact. "And I think we are better prepared to meet any event ... that happens in the US that can have negative effects on our economy," said Abdullah, who is also finance minister.
Zeti said that so far "we have not seen any impact occurring" in the Malaysian system even as she noted that global financial systesm were inter-linked. Malaysia's increasingly diversified financial system has also helped in cushioning any drop in liquidity, she said.
"In East Asia, we are closely linked. Our dealing rooms are linked and they have been for quite some time and we are in a position to understand what is happening in our region and we will respond accordingly," Zeti said. She said the situation remains "still very stable."
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