Folks,
I'm a little confused about the purpose of this thread.

Won't it be more productive if we discussed what can actually be done by the average Malaysian to get through this troubled period ? I know we have quite a number of knowledgable and experienced forumers here.

Anyway, here's an opinion to consider on the USD movement :
http://www.bloomberg.com/news/articles/201...real-on-liftoff

To me, it is like gambling now.

I still remember not long ago when USD went from 3.0 to 3.6, the same questions like yours came up. Some believe it will stop at 3.8, some thought it would go beyond. Some even thought it would go back to 3.3. On hindsight, those gambled to stop at 3.8 lost. Those acted on their prediction that it will go beyond 3.8 won the gamble

Same situation now. Will it go beyond 4.0 ? 4.5 maybe ? Or come back down 3.8 or 3.6 ? The stake is big (relative), with US$100k for eg, if it goes to 4.5, you gain RM50k. That is 12.5%

The gamble is significant in a volatile market, if you are in a position to gamble that is (ie you have cash to decide to buy US$ or not). If no spare cash, the person can only watch and pray for RM to perform better

Ways I can think of for ordinary Malaysian to hedge include

1. Buy US$ in local banks by opening a foreign currency account
2. Buy US$ greenback from money changer and keep the cold hard cash (easiest, but can lose the paper money)
3. invest in U.S. Stock (even local share platform can do this)
4. invest in bursa companies with big portion or revenue in USD.
5. UNit trust with investment in US stock market
6. ETF in US$ (refer to unker dreamer's thread)

Of course there are ways other than the above

Except those could earn foreign income, average Joe could only braced for inflation and subsequent drop in disposable income.

This post has been edited by icemanfx: Aug 16 2015, 12:05 PM

Don't be too pessimistic lah. You can always switch your FD to USD. Although close to zero interest

You can also look for jobs in Singapore and earn SGD. Better than MYR

If you really are total lost in confidence in RM, sell everything you got including your parents house, and convert to USD. Of course that is extreme case.

Everyone can do something, not just sit there doing nothing. Although I agree with you most will do nothing and hope for the best. That is human nature. Where is your photo of a frog getting boiled slowly ?

i had always like sam chee kong's (economic adviser to NUBE) write ups - sound arguments backed up with lots of data.

his latest one is about the rm.

if interested, read it. u might get some answers u are looking for.

ok, it's just one man's view in a blog, ya?!

http://samcheekong.blogspot.com/

You better check got "rumour" inside the blog or not. Later you kena accused again by some very knowledgable people who makes tonnes of money

the average msian can't do much.
just don't get into more difficulty by overspending, over borrowing, taking excessive risks.
some may want to grow own veg or make own cheese, but i think all that is just nice talk, zero effectiveness on yr wallet.


bloomberg article... yes, it is always good to read arguments and views from all sides.
there were many such articles in bloomberg and cnbc in may-june about how crude price will return to 70+ by sep.
need to read a lot more to make own judgment and decisions, if any is to be made.

no la. this guy is a reputable economist, a responsible one.

read his stuff, you'll see see what i mean...

Very chim. Too many graphs. Can read only at night bed time

Unless one expect myr to drop below 4.50 to US$, converting assets to US$ at this moment may be too late.

Many people have the same thoughts when RM drop to 3.60 not long ago

Same question now when it is 4.00. Up to 4.50 ? Remain at 4.00 ? Drop back to 3.60 ?

As I have said, it is a gamble. Up to your own self to decide.

Thanks, I do agree that making drastic changes based on current fluctuations will involve considerable risk.

Options 3,4,5,6 need not necessarily be high risk gambles though.

Or look for ways to increase income, even if it's only in RM.

I've gotta agree, there were some pretty optimistic articles coming out of Bloomberg just weeks ago concerning the outlook for oil, and it's now taking a nosedive.

icemanfx,

1) "Don't worry, be happy!!"

There will be more ASx and more DUMMIES to buy ASx to cover this hole.

2) For those that buy ASx regularly over the past few years, do you ask yourself why you can get ASx easily lately?? There are more rounds of ASx and they are more easily available. Why??

Dreamer

This post has been edited by dreamer101: Aug 16 2015, 10:25 PM

Ringgit slump was worse in 1997, says Najib
http://www.themalaysianinsider.com/malaysi...1997-says-najib

DSNR said tis round is better than TDM

he's right - as long as it does not get to 4.71 at the lowest, it is better.


can expect continued carnage in mgs and bursa next week.

This post has been edited by AVFAN: Aug 16 2015, 11:13 PM

http://samcheekong.blogspot.com/
<< With 40% of our debt is short term in nature, thus it can be said that there are about RM 300 billion in short term debt that are vulnerable to reverse flow. The question is, say if only 50% (RM 150 billion) of the short term funds decided to rush for the exit can Bank Negara counter this move? What chance are we able to defend the Ringgit with just USD 96.7 billion left in the Foreign Exchange Reserves? Please do not forget that from the table above, our Short Term Debt/ FX Reserve stands at 80% which is the second highest after Turkey. Turkey is the biggest Emerging Market economy to succumb to the current financial crisis. >>

<< The third point to note from the table above is that foreign holding of Malaysian bonds stands at 44%. This is the third largest after Hungary and Mexico. Malaysia also has one of the largest LCY (Local Currency) bonds in Asia after Japan and Korea. It is close to 100% to GDP or about RM 1 trillion. Below is the breakdown.>>

<< Who are on the losing side when they invest in local currency bonds especially when the Ringgit is depreciating? Well foreign bond holders will be on the losing side. This is because when they exit the bond market they will be getting less USD when they convert their Ringgit to the USD. To ensure the bondholders do not exit at the same time, interest rates will have to rise as a form of compensation. The price of bonds is inversely related to the yield. When happens when foreign investors start selling? The price of bond will go down and the yield will go up. The nightmare every country has is a ‘bond run’. This happens when every bond holder starts rushing for the exit and this will cause a selloff in the bond market which in turn caused interest rates to rise substantially.>>

<< Wrapping Up

In wrapping up, from above we know that Malaysia is now one of the most vulnerable countries subjected to capital outflows. This is mainly due to our large exposure to short term debts. With Short Term Debt/ FX Reserve at 80% and Short Term Debt/ Total Debt at 40% and dwindling foreign reserves. In short, we are running on wafer thin safety margin. With Turkey, Russia and Brazil already admitted to defeat in the Currency war, Malaysia’s effort to prop up the Ringgit by selling the Dollar will end up a loser game. Brazil has since gone to the next level of protectionism by enlisting embargo and tariffs. If our political crisis is not solved within a shortest period of time, our economy, exchange rate and stock market will risk a rapid decline soon.

In tradespeak, this amounts to terminal velocity.>>

Folks,

Some highlight from this blog.

Dreamer

A few points missed out,

1. BNM never want to prop up RM. Recent intervention was just to reduce the drastic move or too much volatility, to prevent unnecessary fear and chaotic.
BNM never want to fix RM at whatever level, which has just been stated by Zeti during recent press conference.

2. Short term debt, mean debt matured soon, it doesn't mean those debt cannot be refinanced, especially if it is RM denominated. Liquidity still ample.
Also those short term debt may not all constituted by gov debt.
It could be corporate, banking borrowing, which normally can be refinanced easily, and not necessary those money must be outflowing.

3. Increase interest rate won't help to counter the outflow, if foreign investors already decided to flee.
A 25 basis or even 50 basis points won't make too much a difference. Capital flee away and back to USD is everywhere, the aftermath remedy of QE ended.
Emerging market has been "enjoying" the QE by Fed since 2010 to 2014, now pay back time.
So current situation is not about interest rate.

The bolded statement is wrong also.
In fact, existing bond holder hurt more by the rate hike and could accelerate the bond flee.
As when interest rate is rising, bond become less attractive.

The currency war between emerging market that many talked about is regarding who depreciate the most for emerging market, everyone want their currency to be lower, not higher.
So their "depreciating" currency is not a "defeat".

BNM probably recognise that they have no gunpowder to PRop up the RGT anyway.

Refinancing is always available. However, interest rates will be different.

Looking more and more like we will revisit Rm4.70 to the USD

this is becoming a possibility by the looks of bursa and our politicians.

bursa freefall.

rm now 4.1235, new low everyday.

cherroy,

http://samcheekong.blogspot.com/

<< Our Foreign Exchange Reserves peaked at $155 billion in August 2011 but has since been declining rapidly. In July 2015, our Foreign Reserves declined to $96.7 billion, a drop of $58 billion from the peak. We have been recording Balance of Payment surplus for the past many years and by right the excess Dollars should be added into the Foreign Exchange Reserves. Yet we are seeing dwindling reserves and one explanation is some of the reserves are being used for open market operations to support the Ringgit. This can be further supported by the expansion of Bank Negara’s Balance Sheet as shown below. >>

1) BNM did intervene regularly since 2011.

2) You are correct in general but it may not apply to Malaysia since 50+% of KLSE is owned by GLC and GLIC. So, a large portion of corporate debt is linked to THE GOVERNMENT.

3) Which prove the point that there may be no way to stop the flow back to USD.

Dreamer

This post has been edited by dreamer101: Aug 17 2015, 10:38 AM