What is your opinion on the Bank Negara new ruling?
Results 1 to 10 of 10

Thread: What is your opinion on the Bank Negara new ruling?

  1. #1
    Join Date
    Mar 2006
    Location
    USJ
    Posts
    2,615

    What is your opinion on the Bank Negara new ruling?

    The ruling that exporters must immediately convert 75% of their proceeds into RM.

    It is a pretty unpopular ruling.

    And BN's recent defence of the RM at a cost of USD 20b came to nought.
    " In the land of the blind the one-eyed-jack is king."

  2. #2
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    Personally, I don't think it helps to stop the free-falling, let alone strengthening the MYR.

    Exporters have always used the USD as a natural hedge to cushion their costings and pricing. Without this natural hedging, it will be very difficult on the conversion from USD to the MYR and then from the MYR back to the USD for all payments.

    I think MYR has been grossly oversold.. and I don't think anything can be done also at this moment.

  3. #3
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    Quote Originally Posted by Welton View Post
    ...I think MYR has been grossly oversold.. and I don't think anything can be done also at this moment.
    Here is an Chinese article that I have translated to support my point..


    Foreign exchange reserves is the best asset to support the value of a country's currency. In September this year, Malaysia's total money supply (M2) was MYR1006.95 billion, while its foreign exchange reserves totaled only USD97.667 billion. In other words, one Ringgit is only supported by a mere USD0.09. Whereas in Singapore, total money supply (M2) was SGD548.96 billion, and its foreign exchange reserves totaled USD253.41 billion, which means that one Singapore dollar was supported by USD0.46.

    From the figures above, you can see that Singapore's foreign exchange reserve is 2.6 times of Malaysia's foreign exchange reserve. This explains why MYR is always more vulnerable than SGD in currency market and is always the easier target. Having said that, the stronger SGD is not an absolute barometer of Singapore's economy outlook. Although the SGD is relatively stable, the Singapore economy has entered the winter as shown by their fiscal and economic numbers .

  4. #4
    Join Date
    Mar 2006
    Location
    USJ
    Posts
    2,615
    It is one way to create artificial demand for the RM.
    " In the land of the blind the one-eyed-jack is king."

  5. #5
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    Malaysia foreign reserve depends heavily on crude price. The MYR will rebound when crude price is above USD75 per barrel.

    However, it is hard to go back to the 3.5 exchange rate when crude price was above USD100.

    Obama has officially closed the door on oil drilling at Alaska's Artic two days ago. It is a mattter of time oil majors will run out of new recoverable reserves in politically stable regions. Whatever is avalable in Iran and some of the war zones in Africa like Sudan and Angola are the last place for oil companies to dump their money. From a selfish point of view, the unrest in Sudan and Angola have saved the crude price to plummet to the bottom.

    Someone from this forum said Australia got a lot of gas reserve... I guess he has not looked at drilling and well data offshore Angola. Also, gas reserve has never been the motivation for hydrocarbon exploration. A reservoir without significant oil reserve, only gas is as good as nothing...

  6. #6
    Join Date
    Mar 2006
    Location
    USJ
    Posts
    2,615
    Quote Originally Posted by Welton View Post
    Malaysia foreign reserve depends heavily on crude price. The MYR will rebound when crude price is above USD75 per barrel..

    However, it us hard to go back to the 3.5 exchange rate when crude price was above USD100.

    I guess we will have to accept the new normal of RM 4.XX per USD from now on.

    And with the RM in such an oversold position vs our USD reserve it is not a question of whether we want to peg, it is a question of whether we can peg at all. And at what rate?
    " In the land of the blind the one-eyed-jack is king."

  7. #7
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    Quote Originally Posted by Welton View Post

    Obama has officially closed the door on oil drilling at Alaska's Artic two days ago. It is a mattter of time oil majors will run out of new recoverable reserves in politically stable regions.
    https://www.washingtonpost.com/news/...=.adde107eecb4

    http://qz.com/869070/obamas-move-to-...oil-ambitions/

  8. #8
    Join Date
    Dec 2003
    Location
    Puchong
    Posts
    2,602
    As the minister says, don't panic, it will recover

  9. #9
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    Problems with the weakening MYR is when you spend/invest in overseas..

    If you are getting paid in MYR and most of your assets/investment are in MYR ... or in other words you are retiring here... then life goes on with little impact.

    Make use of the higher interest rate here to cushion the falling MYR. At present moment, no other currencies account can match the rate here, not even half.

  10. #10
    Join Date
    Nov 2016
    Location
    豐平峽
    Posts
    154
    I recently read an article written by Justin Lin Yifu..

    He said Malaysia will benefit from the expansion of PRC if they play the game well. He also said if you have spare cash for the next 5-10 years, Renminbi is the currency to buy and keep.

    A brief introduction about him...
    He is the 1st Chinese to head the portfolio of Chief Economist in World Bank and he was the Senior Vice President of World Bank from 2008-2012. But what impressed me or rather shocked me is... as a high-flying army academician from Taiwan, he defected to Mainland China in 1979 at the age of 25 !! Imagine, this is 1979 when China was still one of the poorest places on earth !!


    For those who don't know him or wanted to know more abou thim, you can find out from the net

    http://blogs.worldbank.org/team/justin-yifu-lin

    https://en.wikipedia.org/wiki/Justin_Yifu_Lin

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •