Since Moody's assigned a positive outlook in November 2013 the government has sought to improve its finances, rationalizing fuel subsidies and putting in place a goods and services tax, the ratings company said. But the impact on the government's balance sheet has been limited and will remain so, in part due to changes in the external environment, it said. "Those environmental changes have also undermined Malaysia's external position, with large capital outflows, a falling current account surplus, sharp exchange rate depreciation and falling reserves," Moody's said. The ringgit, which was already weaker prior to the Moody's announcement amid general risk aversion related to China, was 0.6 percent lower at 4.4120 a dollar as of 2:05 p.m. in Kuala Lumpur. The yield on the 10-year government bond was up three basis points to 4.25 percent. Investors Flee The outlook cut from Moody's comes about six months after Malaysia avoided a credit rating downgrade from Fitch.