| Abstract | Malaysia introduced a range of capital control measures and a fixed exchange rate in the first few days of September 1998, shortly after banning overseas trading of Malaysian securities, so as to restore financial stability to the country. Under the new mechanism, movements of short-term capital associated with financial asset transactions are stringently controlled. The government then seized this opportunity to inject liquidity into the banking system, as a means to kick-start the economy. With the lowering of United States (US) interest rate and a stronger Japanese yen, the external environment for most Asian economies has improved recently. Still, when trading with Malaysia, Hong Kong exporters should pay attention to reducing the risk of non-payment. |
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