KUALA LUMPUR: Significant institutional investors such as pension funds and insurance industry players will be important contributors towards stabilising the financial market once the United States quantitative easing (QE) tapering measures takes place, says Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz.
She said Malaysia needed to take the tapering as an eventuality but insisted that the country had what it needed to cushion the impact of the tapering.
“First, we received a surge of capital inflow (when the QE was introduced) and when the tapering occurs there will be some reversal but we are well positioned to manage and intermediate this kind of volatile flows,” she told reporters after launching AmBank Group’s coffee table books here yesterday.
Present were AmBank Group Chairman Tan Sri Azman Hashim.
She said Malaysia would see more volatility in its financial market after the scaling back of US economic stimulus.
However, Zeti said the tapering should be positive as it would indicate that the United States economy was recovering and this was good news for the rest of the world.
On foreign exchange markets, she said it was a two-way flow which was the result of progressive liberalisation undertaken by the central bank.
The two-way flow, she said would also contribute towards stabilising the market apart from BNM ensuring orderly market conditions.
The US Federal Reserve will begin its last policy meeting for this year beginning tomorrow which could determine the future of the stimulus programme. — Bernama