Our per capita income was then at RM17,600 (2004) per annum compared to RM37,800 in 2016. And yet, our rating remains the 3/6  BIS central bankers' speeches  same at ‘A-‘. Rating agencies assess sovereign credit risks based on a long term outlook and at most times are reactionary to certain events. This may result in the credit ratings falling behind the curve and not incorporating the latest market developments. For example, Indonesia was only recently upgraded to investment grade by S&P, more than 5 years after Moody’s and Fitch’s gave a similar rating. Market-implied ratings may be a better gauge of a country’s latest credit profile and is already widely used by the market. In the past 3 years, based on bond market yields, Malaysia’s marketimplied rating has at times reached levels that indicate a better rating than that assigned by the rating agencies. Throughout the first half of this year alone, yields for the 10-year Malaysian government securities have swiftly recovered to 3.9% from a peak of 4.5% last November, post-US elections, reflecting higher confidence in the Malaysian bond market. We are currently the largest bond market in ASEAN in terms of percentage over GDP. The Malaysian bond market continues to be resilient and well-functioning. Non-resident holdings of Malaysian bonds have settled at a lower level of 26% compared to its peak of 34.7%.
In contrast, during periods of capital inflows, it is natural for reserves to be accumulated. Reserves play a role in both circumstances to manage adjustments in the financial markets. This includes ensuring the stability of the exchange rate is preserved. This is how we maintain orderly market conditions. Malaysia’s level of foreign exchange reserves is adequate for our stage of economic development, domestic market structure and external position. Malaysia’s reserves is well-within the adequacy range, placing us in a comfortable position relative to regional peers and fulfilling recognised global standards. Malaysia’s long-term growth prospects also remain favourable. These are reinforced by both naturally occurring domestic economic trends and policy consideration, deliberation and action. Malaysia will also continue to reap its demographic dividends and benefit from a young and productive population for the foreseeable future. As education and income levels continue to rise, an increasingly affluent and informed consumer group would emerge – providing additional impetus for economic growth. Time and again, Malaysian policymakers have continuously supported growth by removing structural impediments and promoting an enabling environment for new growth areas to flourish. Strong banking sector and financial market that intermediate business needs. Malaysia’s diversified and well-developed financial sector can intermediate the business and economic needs of the country, enabling businesses to flourish. Malaysia’s banking sector is one of the strongest and most developed in Asia. Banks are wellcapitalised, with capital in excess of the minimum regulatory requirement of Basel III.