theoretically, academically n philosphically, that is correct and noble.

however, given how the annual budgets are drafted, spent or overspent every year, the consequences of sustained low oil price will be very severe, i dare not even think what they might be.

just think where all the money for the "usual expense" will come from... it will have to be either increased taxes or debt. how much more tax n debt can the people take?

this is going to be difficult for all. more so when no one incl our leaders in power seem to even consider this scenario until now!

You do have a point that the consequences of prolonged low oil prices will be severe. However, I don't agree that funding for the "usual expense" need necessarily come from more taxes.

One major area of improvement all Malaysians know about is simply a better management of the government's budget - just look at how every year the Auditor General's report shows so much of wastage, misallocation and downright squandering of taxpayers' money. So what better time than now for Malaysians to demand more transparency and accountability in public finances ?

Just think of it this way - you're in a boat with hundreds of leaks and that magic pail you've so long been depending on to bail out the water has gone missing and all you have now is a small mug. You don't have time to just make a dash to shore because your boat is sinking fast. So what do you do ? You move your butt from that comfy seat and start plugging the holes.

So no, that idea is not theoretical nor academic and certainly not philosophical - it's just plain good old fashioned common sense and very practical indeed.

We need to be less dependent on oil and gas and pay more attention to other industries. Just look at what's happening in Russia and Venezuela now.

venezuela condom price surge to $755usd , time for some entrepreneur to import more of our m'sian rubber there

"The $755 Condom Pack Is the Latest Indignity in Venezuela"
http://www.bloomberg.com/news/articles/201...ty-in-venezuela

Brent crude hovered around $60 in Asia on Friday, up almost 4 percent this week as news of deeper industry spending cuts and a sinking U.S. dollar revived buying.

Wang Tao, a market analyst at Reuters, said Brent would test resistance at $63.40.

Asian markets were buoyed by news of a ceasefire in Ukraine and plans for a meeting between Greece officials and creditors.

German quarterly gross domestic product growth came in on Friday higher than forecast, potentially adding support to prices.

today:
oil usd54, usd1=rm 3.595.

maybe too early to say, but is rm now getting weaker despite oil some price recovery?

Crude oil is crude oil.
money is money.
They have 0 relation basically.

some so-called "oil analyzer" said that higher oil price = stronger ringgit

Analyzer is just a machine which are being controlled by speculators.

Financial analysts are humans too, so every finance news you read regardless of source, needs to be read with a good dose of critical thinking a.k.a pinch of salt.

Yup, but they are paid to cheat others.

Of course there is a relation. If perception is that Malaysia is dependent on oil revenue, and oil prices drop, what does that say about the economy and other fundamentals of the country?

Think about it from an investor point of view. What are you going to do if a country you are investing in, potentially is heading down south and even risks of a sovereign rating cut from the rating agencies?

What happened to the Russia ruble?

But when oil price at 120, what people are getting?

Focus on the reason why you made that statement. The other posters are NOT wrong to say that the USDMYR is currently BROADLY co-related (with some deviations, but typically reasons of such would be available only to those in the industry) with oil prices.

When oil price is USD120 per barrel, from an exchange rate regime people just see that there's no issue relating to oil prices for foreign investors to start selling their MGS. If in that scenario, Malaysia handle the increased revenue well, economic data is good, foreign investors flock in thus strengthening MYR.

In short: Strength of the local currency is very much RELATED to oil prices.

This post has been edited by Sesshoumaru: Feb 19 2015, 04:42 AM

Falling Oil Prices - Where it leaves Malaysia? in the debt of hell....

Sorry, your statement are nonsense.
In short, oil price high, people suffer, oil price low, people also suffer.
In long, rm strong, people gain nothing, rm weak, people gain nothing also.
But, speculators are gaining in regards to oil price high high or low, rm weak or strong.

i tend to agree with yr statements.

while oil is not the only factor, the perception and hence investor actions are such - low oil price, lower oil prcoeeds, lower gomen income, incr fiscal budget deficit, mgs rises, money outflows, rm depr.

but what i am thinking is whether the situation is currently much further aggravated by the weak positions of other things particularly falling cpo exports, the 1mdb blackholes and a general public pessimism of the effects of the coming gst. all that may drive the rm further down in the months ahead - even if oil price recover to usd60-65. and if oil price returns to 40-45, the rm might dive very quickly...?


a contrasting case is indonesia. it has long became net oil importer. at this time, it is clearly benefiting from low oil price; stock market at record high; current/expected indon inflation lower than msia; rupiah is relatively stronger than the rm.

This post has been edited by AVFAN: Feb 19 2015, 10:08 AM

Rupiah was >3 one year ago. Now only ~2.8. Depreciated ~10% against RM

You are not focusing on the topic at hand again, rambling on towards 'people gain nothing'. I rarely make notes on the person making the comments, but you called my statement nonsense because you are in a different league from me - a league that does not understand how to discuss intelligently. You also derailed my call on your statement being incorrect into something else entirely because you are unfocused and cluttered in your thinking, equating your own personal experience to everyone elses', including the country and businesses.

My discussion with you ends here.

The day to day pricing of USDMYR is rather interesting to say the least. Since the beginning of this year, it has been mostly volatile. Yes the 1MDB issues does cause some concerns, and it swings because of it. 1MDB loan about to blow up? MYR down. 1MDB repaid? MYR up (but also because AK did the repayment in USD, so there was a MASSIVE sell down of USD in the market. If oil prices come to 40-45, it's possible for it to head towards 3.73, a level seen during the financial crisis period (2009). Something to note: A big portion of the movement in USDMYR so far, is due to offshore funds, with huge amounts of $$$. What's driving the movement of USDMYR is not directly what you and me think about the economy with personal experience (unless you have hundreds of millions of $$$, not me definitely), it is those with money. You exit 1 mio USD? Not a dent in the rate. You exit 100 mio USDMYR? Market will react.

In general, though, the weakening of MYR is not entirely MYR's fault. USD itself has been strong, with hypes over them increasing interest rates in the 2nd half of this year. They are the current big block that is recovering together with the UK, while the rest is still on the south like Europe or Japan (and hence their massive QE). Buying EUR or JPY now, is cheaper then if you were to compare it against it a year ago.

On Indonesia, I'm still going towards hedging Rupiah receivable exposures for Malaysian-based corporate. I have been advising my customers as such for a while now, and still am. Short-term fluctuations are expected, but long term we have seen IDR dipping a whole lot against MYR. I'm lazy to open my Bloomberg now, so this will do.

http://www.xe.com/currencycharts/?from=IDR&to=MYR&view=10Y

Anyways, Happy CNY and Gong Xi Fa Cai all. Spent too much time then I'd like on this anyways. Facing this sort of discussions everyday with my corporate customers is not enough, no, I have to continue this in LYN.

Again, is you that pick on me first with you own agenda(to mislead people). Did I ever pick on your statements? I never.

thanks for yr insightful comments, probably the most meaningful to me in this thread so far.

while u hv professional exposure to the subject, my understanding and questions are simply based on what i read and experience in the context of my personal investments. i appreciate u took time to comment, so thanks!

3.73... alright, i'll keep that in mind. i was actually wondering if 3.80 is possible since all the prime factors considered, none of them seem to be working for but only against the rm - oil price, cpo price, budget deficit, debt levels, fdi, mgs yield, consumer confidence, etc...

indon rupiah... i only notice it did badly over the last couple of years (like other emerging markets) but has done well over the last 2-3 months, relative to the mighty usd and rm. it dipped just a few days ago due to int rate cut - that, we know, of course.

which brings me the urge to ask if u see any possibility, any room, for bnm to cut int rates by say 25bps before year end? would consumer spending post-gst, assuming current unfavorable conditions persisting, be weak enough for bnm to cut rates to spur spending again, despite all other "dangers" surrounding such a move? thanks.

This post has been edited by AVFAN: Feb 19 2015, 07:47 PM