In testimony before the US House Banking Committee, Soros said Malaysia's response to the Asian economic crisis had been effectively to "opt out" of the international financial system.

His comments concerned the decision September 1 by Malaysian Prime Minister Mahathir Mohammad to fix exchange rates and limit foreign access to the Malaysian ringgit, in a bid to end currency volatility and ease interest rates. Soros, who last year clashed bitterly with Mahathir over the role of speculators in southeast Asia's currency woes, said the latest steps might result in temporary relief - ``If not for the economy then at least for the rulers of the country.''

Such relief would come through lower interest rates and stock market gains, but would be ``bound to be temporary because the borders are porous andmoney will leave the country illegally,'' Soros maintained.``The effect on the economy will be disastrous, but the local capitalists associated with the regime will be able to salvage their buisnesses, unless the regime itself is toppled,'' Soros said.

``The measures taken by Malaysia will hurt other countries that are trying to keep their markets open, because they will encourage the flight of capital,'' he said.