What I gather is like this.

When the economy is good, the currency value will increase (example USA). However, to control inflation, the Fed’s will increase interest rates. This will result in borrowings become more expensive, which indirectly result in business scaling down their business and consumer spending less but saving more.

When the economy is bad, the currency value will decrease. Also, externally when your neighbour drastically devalues their own country to make their economy more competitive and spur growth (means probably their economy is doing bad (or possibly even worse). Regionally, countries with strong currency would want to follow through and devalue their currency so as not to lose competitiveness to other countries. (example Singapore, which also rely on manufacturing. Manufacturers might see China as a cheaper avenue to produce their goods and move their business to China.)

Conclusion. There will be no interest rate hike in Malaysia but if situation turns for the worse, probably another interest rate cut? Niiiiccceeee but unlikely.

By the way, my bank just informed me they reduced their ECOF, so i am paying less interest as of the month of Aug 2015.

Ops my bad, should have said base rate.

Effective cost of funds is used for share margin financing, pai seh.

Anyway my
sos interest rate

Meanwhile, millions of miles away in an unrelated matter.

CNN Exclusive: Sanctions deal will unleash Iran's oil production, official says
http://money.cnn.com/2015/09/01/news/econo...ction-zangeneh/

"He's aiming for an increase of close to 1.5 million barrels by the end of 2016, taking daily production to 4.2 million."

Obama secures major foreign policy victory on Iran deal
http://www.independent.co.uk/news/world/am...l-10483118.html


Meanwhile in the home front, on 3/9/2015, our finance minister say:-

Najib says economy can meet ‘any incoming storms’
http://www.themalaysianinsider.com/malaysi...incoming-storms

Oil prices now trading in USD 46+, see if you can still talk cock when oil prices are USD 30+.

This post has been edited by aurora97: Sep 3 2015, 03:36 PM

Financial Times: Saudi Arabia burns through foreign reserves (30 April 2015)

http://www.ft.com/cms/s/2/01948d2c-ef49-11...l#axzz3kjGoIeUq

Before the oil crisis, Saudi Arabia had USD 800 billion in reserve. Today, it has spent close to USD 50 billion in a span of 1 year trying to prop up its economy, defend its oil market share and attempting to crush American shale oil producers. Assuming they burn USD 50 billion a year, they can burn through it in 16 years. Not really a big issue for them.

WSJ: Saudi Arabia Issues Bonds Worth $5 Billion to Plug Budget Shortfall (11 August 2015)

http://www.wsj.com/articles/saudi-arabia-i...fall-1439305126

I was watching CNN the other day and noted this article. Apparently, it’s a first for Saudi Arabia. The CNN commentator actually mentioned, it’s like having your rich neighbour next door who has been buying cars in cash… suddenly decided to take out a car loan to buy a car.

Bank Negara’s international reserves at US$96.7b (7 August 2015)

http://www.thestar.com.my/Business/Busines...July/?style=biz

Is it really enough? Looking from a Saudi Arabia perspective or its just not right to compare with a rich neighbour?

BNM reserves: Should we be concerned?

Low international reserves a concern? how does it affect the RM? Interesting article below:-

http://www.businesscircle.com.my/bnm-reser...e-be-concerned/

Summary…

it still looks like BNM (or Zeti) is still holding all the Spades (for now).

I think it won’t be too long now US will declare an interest rate hike (the highly anticipated mid-September hike, after it missed the July window), there’s probably a silver lining around the corner for RM (or it will be delayed till December?). Who knows!

Iceberg ahead????

Iran’s oil output plans put focus on Opec strategy

http://www.ft.com/intl/cms/s/0/4f991b44-4b...l#axzz3kjGoIeUq

Looks like Saudi and Iraqi are ramping up production to maintain their market share, completely disregarding Iran’s entry?

Putrajaya receives first Petronas dividend payout (3 March 2015)

http://www.themalaysianinsider.com/malaysi...dividend-payout

31 December 2014, Putrajaya received RM 26 billion (not 2.6billion) in dividend (not donation) from Petronas… Should be interesting to see whether Petronas can repeat it’s performance in 31 December 2015 and especially 2016.



I must say I have to concur with the statement above….

Looks like all signs are pointing to a further depreciation in the RM… “ICE-BERG!”, captain replies: “FULL STEAM AHEAD!”