KUALA LUMPUR: The country's economy is able to endure external shocks due to its robust banking system, Finance Minister Tengku Datuk Seri Zafrul Aziz said.
He said the liquidity of the Malaysian financial market is supported by the presence of domestic institutional investors as well as a deep and highly liquid financial market.
"This can facilitate orderly inter-mediation of portfolio flows, thereby reducing the impact of external financial shocks," he said in a parliamentary written reply.
Although the value of the ringgit is affected due to the increase in the US dollar, Zafrul said Malaysia's economic growth is increasing while the unemployment rate has decreased.
He added despite volatility in global financial markets and foreign exchange, these would not affect the recovery of Malaysia's economy.
"Domestic liquidity conditions continue to be adequate with financial and foreign exchange markets continuing to function properly.
"The government wants to emphasise that the country is not experiencing a currency crisis.
"Although the ringgit's exchange rate against the US dollar has depreciated this year, it is different from the situation that occurred during the Asian financial crisis of 1998.
"This is because the pressure on the currency is now driven by external factors and not due to the weakness of the basic structure of the domestic economy."
Zafrul said the present foreign asset holdings by financial institutions and corporate companies proved that Malaysia's external asset position is strong.
In addition, he said the flexible ringgit exchange rate will continue to play an important role as an external shock absorber without affecting domestic economic activities.
Zafrul said to control outflows, statutory bodies and government companies have been told to prioritise domestic investment and the approval of the Ministry of Finance is required for overseas investment.