Jan 7 2015, 05:14 AM
QUOTE(xeda @ Jan 6 2015, 10:56 PM)
People panic when they see MYR is weakening, but in reality, have you guys actually analyse and look at how it will affect you? Most of the people won't be affected unless MYR goes down the drain to a level that is so low, like MYR 5/USD or something.
That will never happen, as soon as the MYR goes down so low, the government will just peg it at a point, they've done it before previously.
And if you're trying to make a quick buck from the decline, let's do some simple calculation eh.
Now it's MYR 3.55/USD. So let's say you buy MYR 20k worth of USD now. You'll get USD 5,633.80.
So we assume MYR will go down to MYR 3.8/USD - this was the rate back in 2005/2004 - around 10 years ago. How much would you gain?
It's interesting to note that back when MYR was around 3.8/USD, the average Malaysian was still living normally, nobody died of hunger or couldn't survive or anything like that.
USD 5,633.80 x 3.8 = MYR 21,408.
So with MYR 20k, you get around 1.4k profit, around 7%. That is the best case scenario. What if you missed the selling window, and the MYR goes back up? Forex is a highly fluctuating and speculating investment.
So before jumping up and buying USD and all, you better be prepared. Does the profit outweigh the risk? Up to your personal appetite.
Wooooooo there horsy ... You think pegging money is the answer to everything ? You really don't know the risk of pegging money. That will never happen, as soon as the MYR goes down so low, the government will just peg it at a point, they've done it before previously.
And if you're trying to make a quick buck from the decline, let's do some simple calculation eh.
Now it's MYR 3.55/USD. So let's say you buy MYR 20k worth of USD now. You'll get USD 5,633.80.
So we assume MYR will go down to MYR 3.8/USD - this was the rate back in 2005/2004 - around 10 years ago. How much would you gain?
It's interesting to note that back when MYR was around 3.8/USD, the average Malaysian was still living normally, nobody died of hunger or couldn't survive or anything like that.
USD 5,633.80 x 3.8 = MYR 21,408.
So with MYR 20k, you get around 1.4k profit, around 7%. That is the best case scenario. What if you missed the selling window, and the MYR goes back up? Forex is a highly fluctuating and speculating investment.
So before jumping up and buying USD and all, you better be prepared. Does the profit outweigh the risk? Up to your personal appetite.
Doon't think pegging money is like a snap of a finger by the government.
Go search the web about risk pegging currency.. Last time Malaysia have reserved .. Now 1MDB already eaten that reserved .. How to peg money ?? You tell me !! We are not Japan produce tech and hell we are not China that produce goods.
Read and learn before you say "Pegged" currency is the answer BOY !! .
Cons of a Fixed/Pegged Rate
Is there any downside to a fixed or pegged currency? Yes. This type of currency regime isn't all positive. There is a price that governments pay when implementing a fixed or pegged exchange rate in their countries.
A common element with all fixed or pegged foreign exchange regimes is the need to maintain the fixed exchange rate. This requires large amounts of reserves as the country's government or central bank is constantly buying or selling the domestic currency. China is a perfect example. Before repealing the fixed rate scheme in 2010, Chinese foreign exchange reserves grew significantly each year in order to maintain the U.S. dollar peg rate. The pace of growth in reserves was so rapid it took China only a couple of years to overshadow Japan's foreign exchange reserves. As of January 2011, it was announced that Beijing owned $2.8 trillion in reserves – more than double that of Japan at the time.
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