Singapore Malaysia (3 month FD rates)
 
1997    3.41% 7.35%
1998    5.17% 8.70%
1999    1.70% 6.45%
2000    1.68% 3.18%
2001    1.70% 3.25%
2002    1.00% 3.27%
2003    0.78% 3.13%
2004    0.40% 2.87%
2005    0.41% 2.80%
2006    0.56% 3.21%
2007    0.57% 3.61%
2008    0.48% 3.56%
2009    0.38% 3.30%
2010    0.22% 2.23%
2011    0.18% 2.94%
2012    0.13% 3.07%
2013    0.14% 3.11%
2014    0.15% 3.11%
2015    0.15% 3.78%

1997 forex RM:SGD 1.00:1.79

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 2.78 (2015) = RM3360.57
RM wins. Malaysia Boleh. Bercukur ada Barisan Nasional

it's sgd/rm.

3.00 is not impossible in the next 24 months given all that we know at this time.

if that happens, usd/rm will be 4.0.

why so?

would the usd strengthen all the more?

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

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.