see how quickly things change in just 2 months?!

today:
1. Put S$1000 in FD renew on maturity from 1997-2015 = S$1208.84
2. Put RM1790 in FD renew on maturity from 1997-2015 = RM3652.44
3. S$1208.84 x 2.90 (aug 2015) = RM3505.64

interest rate parity will fulfill its "prophecy" when rate gets to 3.02.

anyone care to do for the usd?

one quick and dirty speculative approach: 3.02/2.90 x 4.08 = 4.25.

This post has been edited by AVFAN: Aug 16 2015, 02:12 AM

Question to Dreamer and Avfan on the followings :-
(1) When would 1.4 million Malaysian civil servant faced the historical 1st retrenchment ?
The prime minister department received so much budget allocation so I want to see a reduction soonest.
(2) When would Petronas generate negative cashflow from its operation? Do you think Malaysia economy will have trade deficit in
2016 so as to create a double deficit in trade and service account ?
I expect RM4.5 to 1 USD and RM3.75 to 1 S$ by next year 2016 but depending on the (2) above the exact time is
no certain.
(3) What is the real inflation rate in 2015 ?

Summary of Today news report on Petronas as per described in attachment.

Petronas 1st 6 months net profit drop 43% to RM22.5 Billion.
Petronas has start using its internal reserve to pay the government RM13 billion ringgit
dividend being the 50% of 26 billion ringgit every year to pay for 1.4 million civil servants etc.

Petronas 1st 6 months turnover drop 28% to 61.3 Billion, Cashflow generated drop 33% to 17.2 Billion.

Petronas net asset stood at RM576 billion,debt ratio is 15.6%.

The other information is CIMB research stated that the trade surplus will stablize to RM30 billion
from RM47.3 billion.
Service account has outflow of RM15.7Billion in 1st quarter but 2nd quarter improve to inflow of RM8.5billion.
However, the 3rd quarter from July to Sept may have outflow of double of Jan.

Economic growth is revised downward to 4.9%.

This post has been edited by 2malaysia: Aug 16 2015, 02:06 AM


Attached thumbnail(s)

But any reason for Zeti to say that?
Weakening MYR would mean it'll be more costly to service loan payable in USD. Ain't that bad for the economy?

Gomen budget is in myr, petronas income is in US$, a drop in myr will help the gomen to reduce budget deficit. In a way, myr depreciation is intended.

Bnm could rise interest rate to stabilize myr Forex rate and curd inflation rate. Until bnm rise interest rate, expect myr to depreciate further.

Most gomen debt is in myr and little in US$.

icemanfx,

1) If that is true, record oil price in 2012 would had help THE GOVERNMENT to reduce budget deficit, it did not.

2) That drop in RM will have to be big enough to offset drop in Oil Price in order to matter.

Dreamer

This post has been edited by dreamer101: Aug 16 2015, 07:56 AM

Putrajaya alredy instructed to 'limit' outflow of USD from M'sia
However, some GLC (Felda) continue to buy foreign assets (Eagle High Plantations) for USD680 mil
If USD continue to go out, it will depress MYR further
Tis indicate action speaks louder

Russia have implemented such measure earlier
Google n find out wat happen to Ruble n its economy

The more you wrote, the more you expose yourself you have very little knowledge on economics.

Cherroy has explained what you need to know. Google more if you still do not understand

Don't be so defensive when people pointed out your mistake. He is actually spending time teaching you. You are actually benefitting

Unker,

The rumour says that "the bank is imposing rm3k withdrawal limit" like what Greece did. That rumour never thought of the difference in central bank's function of Malaysia and Greece.

Malaysia can print money, Greece cannot. So the rumour is busted

RM devaluation is just the collateral damage of printing money. But if Malaysia want to, BNM can print unlimited RM, just like Zimbabwe.

Not their concern at the moment. Their concern now is their chair in the office.

If they don't take care of their chair in the office now, soon they have to worry about the chair in prison cell

If I am in their situation, I would have done the same thing

Your 4.25 has certain academic standing. That may be the final stabilized exchange rate while SGD could be 3.02, based on interest rate parity

But politics could thwart the numbers into space

Showtime747,

Then, please answer my question. If BNM print unlimited RM, FOREIGNER no longer buys Malaysia Government's bond, how is THE GOVERNMENT going to finance the budget deficit??

Please note that 2 millions to 2.5 millions of THE MAJORITY are on THE GOVERNMENT's pay roll. THE GOVERNMENT has to increase their pay / income to beat inflation in order to stay in power.

Dreamer

P.S.: "Don't worry, be happy!!". There will be enough DUMMIES out there to buy ASx to supply the money.

This post has been edited by dreamer101: Aug 16 2015, 08:23 AM

My answer : if BNM need to print unlimited RM, malaysia economy will collapse, and hence MGS will become junk bonds. But, mind you, even junk bonds has a market

My guess is by the time Malaysia economy collapsed, government will changed, and slowly confidence will be restored. But Malaysian will have to suffer 1 round before we move on

But Malaysia does not need to print unlimited RM now. So, Malaysia still can raise funds now

The international ratings still give good ratings to MGS. In fact a slight improvement by Fitch in the most recent announcement. None of the rating agencies has downgraded Malaysia ratings despite the RM slides

So at it is, if Malaysian government still want to issue bonds, there are still some investors willing to take up. Not to mention EPF. Plus those "dummies" as you called them who will hand over their hard earn money if ASx increase interest rate to 8%

As it is, I don't think BNM still need to print unlimited RM. Ample of liquidity in RM and BNM has enough to reserve to meet foreign investor who chose to exit malaysia

If he already keluared, why still making fuss here? Not giving the exact situation but keep put negativity here?

Look, I am not from finance or whatever. But I still have my logic in my brain, yes, the current situation is very bad but not that bad until the nation going to collapse...

The whole thing happen is due to LACK OF CONFIDENCE. Once the thing resolve, I believe KLCI shoot up to 1900 isn't a big problem just a matter of time.

He keep saying thing is going be like Greece and still got people feeding the bait and asking withdrawal limits. If he want to spread the rumour, why don't just make it very clear and asking people start to pile up cash under the pillow rite?

Another thing I don't understand why hekeep saying people who invest in ASNB is dumb. I mean, yes, if gov take money from the ASNB, don't you think they will did the same to MBB TNB PETRONAS RHB MBSH TH KWAP????!!!!! All the blue chip will be suffered. If yes, then how?

The world is working upon threshold, if anything gonna happen, threshold triggered, things will start to cleared off.

He keep saying people should invest in foreign market or whatever foreign currency acc. But this about it, if a household income of 8k got children etc etc, how to invest, even UT is problem for them. What to do just keep in local bank. Then he say local bank will collapse.... if like that go back to system barter better!

Generally, most debt are in RM denominated, as compared to 1997 whereby a lot of debt were USD denominated.

This is the big difference.
If currently debt composition is still as last time with high percentage of debt was USD denominated, then yes, it is a big problem already.
Many had learned the lesson of 1997 the danger of using foreign currency denominated borrowing.

So watch out those listed company share with high USD denominated debt one.
It may put a big dent on their financial report for the coming financial report if USD staying at elevated level.

During the good time, no reason for the gomen to reel in spending.

Gomen doesn't has the will to cut budget deficit. Due to 1ndb, gomen will need to pay extraordinary rate to attract foreign bond buyers. Hence myr depreciation is a cheaper solution for the gomen.

Russia is under trade sanctioned, can't equal Russia with mys.

I'll be defensive if I have right what that was wrong earlier, especially if it comes from someone who did not read earlier posts and start throwing in unjustified accusations, also known as misconstrued judgement - FROM YOU. Sure, I agree it's a rumour, and I'm glad the rumour is busted,.. fine,... but again, read earlier posts, I was the onewho agreed to it that's it's a rumour. I'll leave my rantings here to focus on more concrete debates.

I appreciated yours and Cherroy's feedback. So,...again to you, looks like I am under-knowledged on international finance. Well, I'm glad I have enuough investments and instrumnts that are still doing well in these economic times. Hmm,... like you said 'I have very little knowledge on economics'....if someone who has very little knowledge on economics can still perform at this level, then,.. well,...

Every sovereign country that has its own currency can print their own money, if not where the money comes from?
Just the more you print, the less value your money will be aka at the cost of inflation, which may haunt you back.

That's why central bank generally will refrain from printing money, unless necessary, as you don't create 'wealth" by printing more money.

This is a fact, not only theory.
When US underwent QE time, they create extra trillion of USD, that's why we saw USD exchange rate plummeting across the globe.
Same with Japan QE, ECB QE.

Eg.
if you print 10 bil, then there is potential 10 bil outflow aka there will be pressure of 10 bil of supply to buy USD or other foreign currency
if you print 100 bil, then there is potential 100 bil money that want to exchange to USD.

100 bil selling pressure more than 10 bil, hence price will go down.
Basic of supply demand that dictates the movement of pricing.

Yes, please do not blindly believe anything, when you think the limit of 3K withdrawal unfounded rumour, it totally has no logic at all, so easily busted.

The news about those money changers outside may be short of USD, is due to demand on physical note, not about liquidity.
Anyone still can exchange a few or hundred of million USD with banks easily.

The only reason why banks want to impose withdrawal limit is when they are short of liquidity.

Currently, liquidity between banks is ample, if banks are short of liquidity, you will see Klibor rate shooting to the roof particularly overnight rate and 3 months rate which serves as indicator what is the situation of liquidity in the financial market.

When there is a liquidity squeeze, you see interbank rate shoot to the roof like during 2008. (Libor rate for global banking interbank lending)

Gentlemen,.. to me, I am more keen to know what the direct effect is to my wellbeing and my loved ones'. The above is ONE DIRECT EFFECT to me. Weakening of the MYR currently will further cause incarese in the price of goods in the country. After the price of goods has increased, it will NOT drop back easily even if everything - the economy, RM, politics recover.

I have diversified my investments into,...

1) RM-wise - ASX funds, and
2) foreign-denominations-wise - many diff instruments overseas,...

Now that the RM is low, like I don't get to see the RM is at such low level for many years, I wonder if it is good to convert the foreign currencies and bring them back to Msia to buy more ASX funds. I will only do this if I can be confident that this country is come back,....

All that we have discussed / speculated upon / debated on / deliberated on / and 'scolded each other about ' will,... hopefully, give a clue in how to make some decisions going forward.