If US raise their rate, then USD/RM will reverse the trend. Watch this space.

Xuzen

why so?

would the usd strengthen all the more?

more will abandon rm for the usd. isnt that how it works?

This what I wrote short while ago.

Now, consider when US increase their rate... let's say from zero interest rate to 1%

year 0: USD 1.00 = RM 1.00
year 1: USD 1.01 = RM 1.05
year 2: USD 1.0201 = RM 1.102
year 3: USD 1.0303 = RM 1.157
year 4: USD 1.0406 = RM 1.215

Hence by year 4, only RM 1.169 will be needed to exchange for USD 1.00 as compared to RM 1.215 at zero interest rate. Now you see that when US increase rate, the forex gap will converge as oppose to diverge.

Xuzen

If US increase their OPR, the currency will be strengthen for short period of time, it do being some +ve effect, but after certain period, it will go down also. Especially when debt/GDP are high. US basically already bankrupt, that's why they have to use shale oil to gain crude oil market share. Most of their super tankers are fully loaded with ME's crude oil, if they are able to win in this crude oil price war, they will use the storage crude oil to be sold at much more expensive price to cover the hole that being dig after few rounds of QE.
Because US now lose on the price war, that's why they stop increasing OPR and keep on spreading lies that they may will increase OPR soon.

us raise rate, rm gets stronger?

i doubt it. it may stabilize for a while but will continue to decline (assuming no major changes) until the global markets are assured usa will not raise rates anymore.

at this time, the expectation is usa will raise rates once or twice this year and then another once or twice in 2016.

meanwhile, bnm been leaving the rates unchanged meeting after meeting.

merrill lynch's been expecting bnm to cut rates since last year, but they have been proven wrong so far.

indon, oz, south korea, nz all cut rates in the last 6 months - the currencies dived, off course, each time a cut is made.

cutting int rates makes a currency weaker with another currency but the idea is to spur growth, improve employment and production, trade and budget balances so that the currency is in demand again which then allows int rates to be increased to strengthen the currency further - that's what's going on with usa now. if rates stay low and protracted, and economy does not improve, something will give way eventually - a devaluation plus a massive hike in int rates - like what we saw recently in venezuela or ukraine.

interest rate parity does catch up over time.

This post has been edited by AVFAN: Jun 13 2015, 03:02 PM

So far US already call the wolf is coming since end of last year. And each time they call, rm gets weaker

Hah! Got you... interest rate parity works!

Xuzen

that is true. big economies can do a lot what small ones cannot. today, only usa, germany and japan can sneeze, others catch a cold.

china and india will rise to the level in time.

small cats can meow, get eaten up by hyenas faster.

Weak RM is very good for commodity EXPORT and TOURISM business while reduce local ppls traveling out. Hence, will be more surplus than deficit.

With export and tourism business, more ppls got employment, OT and pay taxes plus spur domestic expenditures.
Spore is not export oriented country like Msia, hence to reduce
their cost and control their inflation, their central bank(MAS)
alwats hike SGD to meet mentioned objective.

well what I know Singapore people are happy to visit Malaysia & spend their SGD..

Some money changers out of stock for RM in the city-state

That's why US try to push for TPA, the president even talk openly that if those small countries(like Malaysia) will suffer the most if don't sign TPA agreement and let China dominate the economy

don't play2 with China yo.. they're spending a lot of $$ in others countries..

India, Vietnam, Indonesia, Laos, cambodia or even Malaysia all they sapu.. all kind of projects

even the upcoming HSR projects also might go to China-M'sia JV

This post has been edited by nexona88: Jun 13 2015, 06:55 PM

no need to , u will only get hurt.

"everybody wants to rule the world".

mathir tried to corner the tin market in 1981, lost billions.
http://www.themalaysianinsider.com/malaysi...s-bad-as-najibs

russia's putin may hv tried to corner the gold market in recent years.

saudi is still trying to control crude price, battling shale and getting hurt.



so, u can decide if is worth it.

Not really, Saudi's only need to spend 1-5 to dig oil out while shale oil need to use 40-50 to produce. That's why Saudi dare to sailang to have oil price of 20
But again, at 50, almost all O&G suffers

it's good, really. that's what free market capitalism is about - lowest cost producer wins, all consumers win.

let oil get to usd10/bbl!

whoever produces something at lowest cost wins - as long as it last.

f those who want to gouge and rob!

now... u get me upset with unifi.

Oil price is unlikely to goes up as long as USD is strong

yesssss.. hoping for USD10/barrel

but Bolehland O&G industry die la

This post has been edited by nexona88: Jun 13 2015, 08:20 PM

But again, with Saudi's way doing now, they are looking for trouble also as once the oil are depleted, they will suffer. But heck, exporting oil products are not their only main source of income, their income will come from Umrah(do correct me if using the wrong term) also. That's the reason why they dare to fight US openly on this matter.

You only need the oil price stay at USD40 for few months and this can kill Petronas already.

Usd 10 per barrel.. but najib still charge u rm 1.50 per liter also no use.. haha

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