KUALA LUMPUR: While tensions between North and South Korea and Europe's debt crisis have a negligible impact on the Malaysian economy, it will affect the global economy; hence financial markets will be more volatile, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
Malaysia is better able to withstand this (external volatilities) as we now have a more developed system. Our financial system is stronger, more resilient and can absorb volatility, Zeti told reporters after the listing of Islamic Development Bank's (IDB) US$3.5bil (RM11bil) trust certificate (sukuk) programme on Bursa Malaysia yesterday.
On the strength of the ringgit, Zeti said it was now depreciating against the US dollar, which was to be expected given the many global developments taking place such as the second round of quantitative easing, the debt crises in Europe and tensions between North and South Korea.
Malaysia has been well positioned to absorb this volatility compared to 10 years ago. Our financial sector is now more developed and diversified. Our financial institutions are very much stronger and resilient. Our financial markets are deeper and broader, she said.On how the loan-to-value ratio imposed by Bank Negara would impact the property market, Zeti said it was monitoring the sector.
She added that loans growth remained healthy. There is still a lot of growth in loans, 11% to 12% (in October from a year ago). That's very good growth, she said.
IDB is the first multilateral development bank to list its foreign currency sukuk programme on Bursa. The proceeds raised from IDB's sukuk programme would be used for general corporate purposes, including financing projects in IDB member countries.
We have not identified specific projects for this sukuk issuance. However it will all be developmental projects in sectors such as health, roads, airports and industrial projects. The projects depends on the economic plan of the particular country, said IDB president Dr Ahmed Mohamed Ali.
He said IDB was in expansion mode and would be going to the market to raise funds either through the sukuk programme or private placement exercise. This year, IDB has mobilised more than US$1bil for its development projects.
The global financial crisis has brought Islamic banking to new heights. Malaysia is at the forefront to create its leadership in this sector, he said.
IDB's sukuk programme is a multi-currency programme established by IDB via a special purpose vehicle, IDB Trust Services Ltd. It was given triple A ratings by Moody's,Standard & Poor's and Fitch Ratings.
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